A New York Times editorial urges the government to extract concessions before approving a merger between American and USAirways. It complains that consolidation is leading to fare increases:
Each merger has made these airlines so dominant at their hub airports and on key routes that it is hard, if not impossible, for any competitor to challenge them, especially at airports operating at capacity. The combined American-US Airways, for instance, would control 68 percent of the takeoff and landing rights at Washington's Reagan National Airport. United already controls 81 percent of the slots at Newark Airport.
These numbers are misleading. For passengers traveling from the Washington, D.C. region, the relevant market isn't takeoff and landing slots at Reagan National Airport, but at the combination of Reagan National, Dulles, and Baltimore-Washington International Thurgood Marshall Airport. Likewise, passengers considering flying from Newark have other options — La Guardia or Kennedy airports if they live in New York or Northern New Jersey; the Philadelphia airport if they live in Southern New Jersey. Plenty of travelers are willing to drive or take a train or a bus to an airport that's a bit farther away from their starting point if the payoff is a cheaper airfare. And the Times keeps plumping for government spending on highways and high speed rail, spending that makes it harder for airlines to compete.
If the Times were really interested in increasing competition in the airline industry, it would target the Civil Aeronautics Act of 1938, which requires that at least 75 percent of the voting shares of U.S. airlines be controlled by U.S. citizens. By imposing artificial limits on foreign investment, that law makes the American airline business less competitive than it might otherwise be. Alas, the Times editorialists seem determined not so much to help airline passengers as to find a way to justify greater, rather than lesser, government interference in voluntary private business transactions.