When antitrust enforcement benefits large corporations
Smaller Airlines Blocked from Merging: Big Business Wins Again
Two smaller airlines, Spirit Airlines and JetBlue Airways, have been trying to join forces to take on the dominant big four airlines. However, their plans have hit a roadblock as the federal government is standing in their way. There are even whispers that the merger might collapse this weekend, leaving the big four airlines unchallenged.
Size matters in the commercial air travel industry. Just look at Delta, which was able to purchase its own fuel refinery thanks to its massive scale. Bigger companies have more power when it comes to dealing with suppliers and vendors. Their extensive networks and loyalty programs give them an edge in attracting customers. Plus, they can keep their overhead costs per customer lower.
During a court hearing, a JetBlue lawyer argued that an airline needs a wide-reaching network to compete with the industry giants. However, by blocking the merger, the federal government is essentially condemning JetBlue and Spirit to forever remain small.
This is a clear case of federal antitrust law protecting the interests of Big Business over smaller competitors. It’s not how things are supposed to work.
Antitrust laws were created to break up monopolies and shield the little guy from the power of the big guy.
Unfortunately, the history of antitrust law is filled with instances where the big guys were favored. The Noerr-Pennington doctrine, for example, allows big companies to conspire against smaller ones as long as the government is involved in the conspiracy.
Back in the 1950s, Pittsburgh Consolidated Coal Company, the largest coal company in the world, colluded with United Mine Workers to drive smaller coal companies out of business. When one small miner, James Pennington, tried to fight back using antitrust law, the courts ruled in favor of the conspiracy because government agencies were part of it.
It’s clear that any government power, including antitrust measures, can be used to protect the interests of the big guy.
Click here to read more from The Washington Examiner.
What are the potential benefits that consumers could have experienced if the merger between Spirit Airlines and JetBlue Airways had not been blocked?
In the way and preventing the merger from taking place. This recent development brings to light the recurring issue of big business winning out over the smaller players in the airline industry.
The aim of this merger was to create a stronger presence in the market and provide more competition for the big four airlines: American Airlines, Delta Air Lines, United Airlines, and Southwest Airlines. Spirit Airlines and JetBlue Airways saw an opportunity to join forces and combine their resources to offer a more extensive route network, better pricing options, and improved customer service. This would have undoubtedly benefited consumers by providing them with more choices and potentially lower fares.
Unfortunately, the federal government’s decision to block the merger reflects a continuation of the trend where big business monopolizes the industry, leaving little room for smaller airlines to thrive. This is not the first time that smaller players have faced hurdles in their attempts to challenge the dominance of larger airlines. It seems that the government is more inclined to protect the interests of these industry giants rather than fostering a healthy and competitive market.
One argument often put forward in favor of blocking such mergers is the concern over reduced competition. Critics argue that allowing smaller airlines to merge into larger entities would result in a decrease in market competition, leading to higher prices and poorer service for consumers. While this concern is valid, it is essential to consider the potential benefits that could arise from these mergers. By combining their resources, smaller airlines can offer consumers a more comprehensive range of flight options, improved efficiency, and enhanced overall experience.
Furthermore, it is worth noting that the big four airlines already dominate a significant share of the market. Allowing smaller airlines to merge is not going to create a monopoly; instead, it will provide consumers with more choices and increase competition against the existing giants. This will inevitably drive innovation and force the big players to enhance their services to stay competitive.
Another argument against blocking airline mergers is the potential for job creation and economic growth. The aviation industry supports numerous jobs directly and indirectly, ranging from pilots and flight attendants to mechanics and ground staff. Allowing smaller airlines to merge and expand would create opportunities for employment and generate economic activity in communities around the country. The government should consider the broader impact and potential benefits that these mergers can bring instead of merely focusing on short-term concerns.
While it is essential to ensure fair competition, it is equally crucial to avoid stifling innovation and limiting the growth prospects of smaller airlines. The government needs to strike a balance, ensuring that the industry remains competitive while allowing for mergers that promote growth and provide greater benefits to consumers. By doing so, it can foster a healthy and diverse airline market.
In conclusion, the recent blocking of the merger between Spirit Airlines and JetBlue Airways highlights yet again the advantage that big business holds over its smaller counterparts in the airline industry. This recurring issue serves as a reminder that it is time for the government to reevaluate its approach and prioritize the interests of consumers and a fair and competitive market. The smaller airlines should be given an opportunity to join forces and provide more alternatives and improved services for passengers. Only then can we truly level the playing field and ensure a healthier and more dynamic aviation sector.
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