I remain unclear on how deregulation resulted in a suspension of antitrust laws in the aviation sector. When the DOJ and FTC examine a merger--any merger--they look at the impact of the merger on competition in the market, not the impact on consumers. To the extent a merger makes a market more efficient, the merger should be (and almost always is) approved. In this country, we've gone through a painful experience with the "big is bad" school of thought. The capstone was the Supreme Court's 1960s decision to block a grocery store merger in California that would have increased market share of the combined company from 5% to 7.5%. It is an undeniable fact that consumers benefit from a company that can take advantage of economies of scale. As economic analysis has come to play an increasingly important role in antitrust enforcement, competition authorities have (thankfully) given up on deciding on mergers based on gut feeling and shifted to making decisions based on sound economic evidence. At no time were any of the post-deregulation aviation mergers exempted from antitrust review, just as none of the oil and bank mergers you mentioned were somehow given a free pass. (The banking sector is, incidentally, an especially poor example of an industry where consolidation might be a negative outcome. Even today, the US has many more banks, by several orders of magnitude, than any other industrialized country. There is persuasive evidence that this is actually a bad thing for economic stability, and the Fed has argued repeatedly that more consolidation is needed.) To say that we should return to the days of government subsidies to support inefficient airline operations (which you seem to be doing) is, in a word, ludicrous. Some communities cannot support 737 service and there is no right, simply because your community has an airport, to point-to-point jet service. Airlines are not in the business of looking for ways to lose money. If a route can support more capacity, that capacity will be added either by the existing carriers or by a new entrant. If there is one fundamental fact about our economic system, it is that if you are sitting on a pile of money somebody is going to try to take it. It is not the government's job to dictate which carriers can fly to which cities and what equipment they must use. Similarly, there is no intellectually honest justification for a government subsidy that keeps a 737 flying 3 times daily to support an average of 18 passengers per trip. Nobody benefits from that outcome. -----Original Message----- From: The Airline List [mailto:AIRLINE@xxxxxxxxxxxxxxxxx] On Behalf Of kurtzke@xxxxxx Sent: Monday, December 08, 2003 5:41 PM To: AIRLINE@xxxxxxxxxxxxxxxxx Subject: Re: Deregulation & Anti-trust Laws Douglas & List: It shouldn't have. Perhaps I should have said "wryly" or "sadly" rather than "wisely." Alfred Kahn was the big promoter of deregulation in the Carter administration. In a retrospective PBS program on the effect of airline deregulation, Kahn said that when he argued for deregulation, he never imagined that the federal government would stop enforcing anti-trust laws. But look at the big mergers that followed. If you think that was a peculiarly Republican (Reagan) fault, look at the big oil & bank company mergers that happened during the Clinton years. But that's leading into off-topic territory. Maybe the coming thing in airlines is many airlines (from Southwest, the recent startups, and the pieces of the coming bankrupt majors), more point to point service, and a return of regulation. john On Monday, December 8, 2003, at 02:17 PM, Douglas Schnell wrote: > Okay, I'll bite. How does deregulation result in the suspension of > antitrust laws? > > -----Original Message----- > From: The Airline List [mailto:AIRLINE@xxxxxxxxxxxxxxxxx] On Behalf Of > kurtzke@xxxxxx > Sent: Monday, December 08, 2003 2:40 PM > To: AIRLINE@xxxxxxxxxxxxxxxxx > Subject: Re: Can't wait until United dumps this sorry *ss airline > > BAHA and list, > [cut] > The result of deregulation (or as Alfred Kahn wisely noticed, the > federal government halting enforcement of anti-trust laws) is that > while you used to be able to fly United, North Central, etc. on a 737 > or DC 9, you now get to fly a commuter airline on a commuter jet or a > small turbo-prop. > [cut] > john > > Fan of enforcement of anti-trust laws John Kurtzke, C.S.C. Department of Mathematics University of Portland Portland OR 97203 503-943-7377