Tonight some top US airline officials must be wondering : "If only we had not charged for baggage." This as anti-trust makes a comeback with the US DOJ and six state and DC lawsuit against the US Airways and American Airlines merger. If there is one thing that annoyed the public it was the angst of paying for checked luggage or deal with the aggravation of going through the daunting TSA inspection for overstuffed cabin baggage.
Before the collapse of communism in 1989 US anti-trust law enforcement was so vigorous that competing Detroit auto executives who worked for Ford and GM did not play golf together. If they did, then there would be car price fixing allegations and anti-trust action according to Lee Iaccoca, reminiscing about his days in Ford Motors. Without communism, neither the public nor the Federal Government had been really looking at the potentially anti-competitive actions of big organizations. But the recession changed all that and suddenly the $25 for the first bag, $35 for the second bag etc. seemed like a lot and also pretty unfair. Consider that there are several start-ups trying to offer luggage carrying services just because the public is so peeved with the hassle and cost of carrying baggage on airplanes.
The DOJ Complaint makes interesting reading. Check out the point 4 of the complaint that quotes US Airways President:
“Consolidation has also . . .
allowed the industry to do things like ancillary revenues[e.g., checked bag and ticket
change fees] . . . . That is a structural permanent change to the
industry and one that’s
impossible to overstate the benefit from it.”
As the DOJ lawsuit plays out , it seems unlikely that the US Air and American Airlines merger will materialize. It would be hard to prove that the merged entity will be altruistic when it comes to looking out for consumers.
Given that there is overwhelming research evidence that most alliances fail unless carefully managed , the resurgence of anti-trust action puts new challenges in the management of B2B alliances and mergers. Contact StratoServe.