UMD-Smith Expert says US Airways-American Merger may be 'a Bridge Too Far'

Media Alert: Aug. 14, 2013
Attention News and Business Editors 

COLLEGE PARK, Md. - Michael Ball, associate dean for faculty and research and Dean’s Chair in Management Science for the University of Maryland's Robert H. Smith School of Business, comments on factors behind the U.S. Justice Department and a group of states moving to block the merger of US Airways and American Airlines because they say the deal would reduce competition and increase fares. 

Ball, co-director of NEXTOR, the National Center of Excellence for Aviation Operations Research, explains what's prompting the action:

"Given the poor health of the airline industry, the various mergers over the past few years have generally benefited both the airlines and their customers. However, recently it has become clear that the major U.S. carriers have been adjusting their historical strategies of seeking to maximize their customer base to strategies that generally restrict their service offerings in order to maximize profits.

"Such strategies, which have led to a gradual increase in fares, are helped by the reduction in the competitive landscape brought about by the mergers. In fact, the American-US Airways merger may just be a ‘bridge too far’ that noticeably dampens competition. To be sure, both are not among the healthiest airlines, and a merger would certainly benefit the combined patient. However, the Justice Department is right to be concerned about the negative impact on passengers. The combined airline would have very strong competitive positions at certain airports and a near monopoly at Reagan National. There is perhaps a strategy the DOJ could pursue that requires the combined airline to reduce its position at some airports, but this might just be too complicated to work out in a reasonable time frame."

Ball also is serving as Smith's interim dean until Alex Triantis assumes the position on Sept. 1. Contact him at mball@rhsmith.umd.edu.

The Smith School has an in-house facility for live or taped interviews via fiber-optic line for television or multimedia content.