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Quick Take Report - Antitrust Concerns Unlikely to Block a 2010 United-US Airways Merger Product Image

Quick Take Report - Antitrust Concerns Unlikely to Block a 2010 United-US Airways Merger

  • Published: April 2010
  • Region: United States
  • 11 Pages
  • Cambridge Aviation Research


  • Airlines Mentioned:
  • Albany County (ALB)
  • Delta Connection
  • La Guardia Airport (LGA)
  • Reno International (RNO)
  • United Express
  • MORE

Back in 2000, United tried to buy US Airways, but the deal fell through due to antitrust concerns. A decade later, United is once again in talks with US Airways. This time, antitrust concerns will not be a deal-breaker.

Recent reports of renewed merger talks between United and US Airways marks the third time in a decade that these carriers have been in serious takeover discussions. Is the third time the charm? As regulatory concerns were a significant factor in derailing 2000's deal, this Quick Take report focuses primarily on the potential antitrust aspects of this proposed merger.

This report relies primarily on historical T-100 filings of domestic service to highlight the profound differences between today's competitive environment and that of just ten years ago. Increased competition from low cost carriers---and the dependence on commuter airlines in response--have dramatically eroded the market shares and pricing power of the legacy carriers. Further, by calculating the Herfindahl-Hircshman Index for each airport served by both United and US Airways, we find only 26 airports at which antitrust scrutiny is likely based on guidelines published by the Department of Justice READ MORE >

United and US Airways: Is the third time the charm?

Data & Methodology

Analysis & Results
- A roller coaster of demand
- Does this merger threaten to stifle competition across the industry?
- Red-flagged: 26 airports which could attract antitrust scrutiny

Conclusions & Outlook

Appendix: Quantifying Market Concentration with the Herfindahl-Hirschman Index (HHI)


List of Tables:

1. DOJ's classification of markets by concentration and guidelines for acceptable increases in HHI
* 2. Red-flagged: the proposed UA+US merger exceeds the DOJ's guidelines for market concentration at 26 airports
* 3. 2000 vs. 2009 domestic service at most-affected SFO before the proposed UA+US merger

(* Expanded versions of Tables 2 & 3 are provided in spreadsheet format.)

List of Figures:

1. Domestic system capacity by month 2000-2009
2. Domestic system-wide load factor 2000-2009
3. Domestic system-wide market concentration (HHI) 2000-2009
4. Domestic market shares for top U.S. carriers 2000-2009
5. 2000 vs. 2009 comparison of HHIs for red-flagged airports
6. 2000 vs. 2009 HHIs for CLT

Airlines Mentioned:
- Airtran
- Alaska Airlines Inc. (AS)
- America West Airlines Inc. (HP)
- American Airlines Inc. (AA)
- Chautauqua
- Continental Air Lines Inc. (CO)
- Delta Air Lines Inc. (DL)
- Delta Connection
- JetBlue
- Mesa Airlines
- Northwest Airlines Inc. (NW)
- Republic Airways
- Shuttle America
- Skywest Airlines Inc. (OO)
- Southwest Airlines Co. (WN)
- Trans World Airways LLC (TW)
- US Airways Express
- US Airways Inc. (US)
- United Air Lines Inc. (UA)
- United Express
- Virgin America (VX)

Airports Mentioned:
- Albany County (ALB)
- Boise Air Terminal (BOI)
- Bradley International (BDL)
- Charlotte Douglas International (CLT)
- Denver International (DEN)
- Eppley Airfield Airport (OMA)
- John Wayne Orange County (SNA)
- Kahului Airport (OGG)
- Keahole Airport (KOA)
- LA/Ontario International (ONT)
- La Guardia Airport (LGA)
- Lihue Airport (LIH)
- Logan International (BOS)
- Los Angeles International (LAX)
- McCarran International (LAS)
- O'Hare International (ORD)
- Philadelphia International (PHL)
- Reno International (RNO)
- Ronald Reagan Washington National (DCA)
- Sacramento International (SMF)
- San Diego International (SAN)
- San Francisco International (SFO)
- Sky Harbor International (PHX)
- Spokane International (GEG)
- Tampa International (TPA)
- Theodore Francis Green Airport (PVD)

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