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In December of 2013, American Airlines and US Airways have completed their long awaited merger to create the . Earlier in 2013, the merger was blocked by the United States Justice Department due to concerns that the merger would adversely affect competition in the of the United States. In order to reach a settlement, American Airlines and US Airways agreed to give up several hundred gates at airports across the . Now the companies expect to save over one billion dollars in synergy with the merger. This merger will undoubtedly have a variety of effects on the global airline industry.
While serve as an important strategy to increase the international competitiveness of a company, mergers between domestic companies can actually have similar effects. In fact, one of the reasons why US Airways merged with American Airlines was to in the midst of intense pressures from foreign carriers. Now, the newly merged airline is planning to provide flights to more than 50 countries. Expanding its service to other countries was made possible by the domestic merger.
Despite becoming competitive on an international level, many consumers fear that domestic mergers create higher prices in the domestic marketplace due to consolidation of competition. What do you think will be the long-term effects of the merger between US Airways and American Airlines on a domestic and international level? Let us know by leaving a comment below!
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