You don’t have to be beaten and dragged off a flight to conclude that flying coach has become a miserable experience these days.
Wondering who to blame? Here’s a suggestion: antitrust lawyers.
The ones who over the past 10 years have represented airlines in merger after merger, doing a song and dance about efficiencies and synergy and economies of scale. And the ones at the Justice Department’s Antitrust Division, who took the bait.
Republican or Democrat, antitrust officials have allowed six major airlines to merge into three since 2008. Sure, they’ve required divestitures here and there, but aside from foiling the merger of US Airways and United in 2001, they’ve let consolidation happen—and competition wither.
I’m looking at you, Thomas Barnett, Christine Varney and William Baer.
So what are we left with? Seats that are 17.8 inches wide. Thirty inches of legroom. Blankets that cost $12. Fees to get an assigned seat or to check a bag. And such disregard for customers that a passenger could be “re-accommodated” by force.
Meanwhile, airlines have posted three straight years of surging profits, hitting an all-time high in 2016, according to The Wall Street Journal.
It’s not as if no one saw this coming.
In 2000, members of Congress held multiple hearings to weigh the proposed merger of United and US Airways, then the second and sixth largest airlines. And lawmakers repeatedly voiced fears that the merger would be the first in a wave of consolidation, ultimately leading to just three giant airlines.
Guess what else? No one thought that would be a good idea.
“If this merger is approved, how can the following merger or the one after that be disapproved? Will we ever draw a line, and if not here, where?” testified American Antitrust Institute President Albert Foer.
DOJ sued to block the deal—well done, R. Hewitt Pate, who was appointed by George W. Bush to head the Antitrust Division and is now general counsel of Chevron Corp. Pate recognized that the proffered divesture “would not adequately replace the competitive pressure that a carrier like US Airways brings to the marketplace,” he said at the time. The parties abandoned the deal.
But then came 9/11 and the recession. The story—temporarily—changed.
In October of 2008, the Antitrust Division under Thomas Barnett (now the co-chair of Covington & Burling’s antitrust practice) greenlighted the merger of Delta and Northwest without divestitures to create what was then the world’s largest airline.
The merger was “likely to produce substantial and credible efficiencies that will benefit U.S. consumers,” according to the DOJ, and unlikely “to substantially lessen competition.”
Pate, by then in private practice at Hunton & Williams, represented Delta, along with D. Bruce Hoffman and Ian Conner, plus James Weiss at K&L Gates. Northwest turned to Timothy Muris, Christine Wilson, Michael Antalics and David Beddow.
At that point, exactly what lawmakers feared in 2000 was coming to pass.
Next up was United and Continental, which tied the knot in 2010 to surpass Delta/ Northwest as the world’s biggest carrier.
“I don’t think there’s any worry that competition will be lessened,” United CEO Glenn Tilton told the Senate Antitrust Subcommittee.
The DOJ under Christine Varney (now chair of Cravath, Swaine & Moore’s antitrust practice) asked for a modest concession to approve the deal: the parties agreed to transfer 36 Newark slots to Southwest.
According to Varney, “This resolution of the division’s competitive concerns was reached for the benefit of consumers but without creating obstacles to a transaction that was otherwise lawful under the antitrust laws.”
Great, thanks. I’m sure those 36 Southwest flights out of Newark have got United running scared.
Take a bow, Cravath partner Katherine Forrest, who represented United (cozy, right?) and Paul Yde of Freshfields Bruckhaus Deringer for Continental. You got your clients what they wanted.
By the time American Airlines and US Airways paired off, it was basically too late to put on the brakes.
“I’m concerned about this merger,” said Rep. Blake Farenthold, R–Texas, at a hearing in February 2013. “But it seems to me with the other mergers that have gone through, it’s only fair” to green light American and US Air.
The Antitrust Division under Baer, to his credit, sued to block the deal. The airlines responded by hiring an antitrust dream team, tapping lawyers including Dechert partner Paul Denis and O’Melveny & Myers partner Richard Parker for US Airways, and Jones Day partners Joe Sims and John Majoras for American parent company AMR Corp.
Two weeks before trial, the case settled. DOJ spun it as a win—but so did the airlines. There were divestitures, but bottom line, they got to do their merger.
Not to be left out, Southwest snapped up AirTran in 2010 and Alaska Air bought Virgin America in 2016.
And we the flying public are left with fewer choices and lousy service.
After I saw the horrifying video of Dr. David Dao beaten and dragged off a United flight, I was one of 138,000 people to comment on the airline’s Facebook page, vowing not to fly United again.
I don’t think they deserve my business. But my closest airport is SFO, a United hub. The reality is, it’s probably a false threat—I just don’t have many other choices. And United knows it.
So much for relying on antitrust law to safeguard competition.
Contact Jenna Greene at email@example.com. On Twitter @jgreenejenna.
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