The blockbuster buyouts that would give American and United airlines dominance of domestic skies could hit travelers using Los Angeles International Airport with higher ticket prices, flight delays, fewer choices and service disruptions in the event of a labor dispute, according to some high-level travel industry analysts.
"If the deals are approved, there could be three major airlines serving Los Angeles that are having labor problems," said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. "Delta is currently having labor troubles, which is having an affect on the industry."
Bill Maloney, executive vice president of the American Society of Travel Agents in Washington, said his organization is vehemently opposed to American Airlines' parent, AMR Corp., spending $1.7 billion to buy the bankrupt Trans World Airlines Inc., one-fifth of US Airways' assets, and a 49 percent stake in startup DC Air. That deal would smooth the way for United's parent, UAL Corp., to buy the rest of US Airways.
"Five years ago I could see these deals occurring for economic reasons," said John Kutler, president of Quarterdeck Investment Partners Inc. "Today, the industry has never been more profitable, even though there are some storm clouds on the horizon, including higher fuel prices and labor problems."
If approved, the deals would make American the world's second-largest airline, with 25 percent of the U.S. market. United would remain the world's largest airline with 26 percent, while Delta would remain third with about 15 percent of the U.S. market.
"This is an example of unchecked airline arrogance and blatant disregard for the principles of competition, but most importantly, it's bad for consumers," Maloney said. "The airlines are too big, too powerful and too self-serving already."
Kutler agreed, saying, "Some level of competition is good for the airline industry."
Maloney warned that any labor disputes could cause major disruptions for the 65 million passengers that pass through LAX each year.
Kyser pointed out, however, that there are several factors that would soften the blow of any work stoppage for Los Angeles.
"We have an escape here and that is America West, Alaska, Southwest and Continental airlines have a large presence in Los Angeles," he said. "In Chicago, which is a hub for American, or St. Louis, where TWA has a large presence, other airlines have less of a presence, which can create problems for passengers during a work stoppage."
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