Mergers of airlines, large and small, is nothing new

February 15, 2013

The announced merger of US Airways and American Airlines is the latest in a series of such moves over the last decade. There have been half a dozen mergers involving major air carriers and equal number involving smaller regional airlines.

Professor Bob Mittelstadt from ASU’s W.P. Carey School of business says this type of consolidation is nothing new.

"Every industry eventually consolidates, and if you look back at the auto industry a hundred years ago, there were supposedly a hundred companies in the United States, people manufacturing cars, maybe more than that," Mittelstadt said. "And today you are down to the Big Three. That’s the way things work. If a company gets good and better and wants to grow, bigger, and if they want to keep their costs down, they have to get bigger to get some economies of scale."

Mittelstadt says the US Airways and American merger means there will soon be four major airlines and that might lead to fare hikes. But he says the surviving carriers will be in much more stable financial positions and able to provide more dependable service.

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