News of a potential merger between the passenger airlines United and US Airways has some Arizona residents concerned about the price of fares and the local economy. Our very own Mike Pearson, who has almost 30 years of experience as a Tempe aviation law attorney, professor, and air traffic controller, spoke with Ted Simons recently about the merger and what it might mean for Tempe and the airline industry as a whole.
The rising cost of jet fuel has many airlines already struggling to cut routes, seats, and jobs. The logical next step for many airlines is to seek out mergers with other companies in order to join forces and cut costs. Some recent mergers and potential mergers have included Delta and Northwest, United and Continental, and US Airways and America West. Although the merger between United and US Airways is becoming a likely possibility at this point, much will depend on the decisions made by both businesses and whether the merger passes federal anti-trust scrutiny. Pearson described the many airline mergers as creating a "natural oligopoly" as the number of competitors dwindles.
If the merger is a go, Tempe stands to lose a Fortune 500 company—and many jobs along with it. Pearson explained that we are likely to see job cuts at the administrative and corporate levels to begin with. It is also likely that US Airways will merge its corporate office with United's office in Chicago. What ultimately happens, though, will be up to the decisions made in the next short while and whether or not the merger actually happens.
Although there have been some fears of even higher passenger fares, Pearson did mention that competition with Southwest locally should keep fares more reasonable despite the changes.