More often than not mergers are not good for us consumers. Of course big business will blow their horns and tell you different but the proof is in your pocketbook.
Can you give me an example of where a mega merger has occurred resulting in lower prices and more money in your pocket? Well I’m waiting. Didn’t think so and you know why, because your memory is too short to remember these companies and market conditions before they merged. Have no fear; I am absolutely not criticizing you because I am right there with you. This is why I am writing this blog to get you to think about it.
Let’s pick an industry and do a little analysis. How about the airline industry, we all love those guys right? Here is link that spells out all the mergers since way back. http://airlines.org/dataset/u-s-airline-mergers-and-acquisitions/
Here is a list of the most recent and the biggest.
Republic Airways / Midwest Airlines 6/23/2009 7/31/2009 Republic Airways
Republic Airways / Frontier Airlines 8/14/2009 10/1/2009 Republic Airways
Delta Air Lines / Northwest Airlines 4/14/2008 12/31/2009 Delta Air Lines
United Airlines / Continental Airlines 5/3/2010 10/1/2010 United Airlines
US Airways/AMR/American Airlines 2/14/2013 12/9/2013 American Airlines (AAL)
Alaska Airlines / Virgin America 4/4/2016 12/14/2016 Alaska Airlines
Look at all of this consolidation and tell me how much the industry has improved. Okay well then tell me how much airfares have dropped. Well, can you tell me that service is soooo much better now? You can’t, well I am shocked.
This industry and really any other industry will do their best to tell you that allowing them to merge will allow them to better serve you because it will help them increase their efficiencies. The merger will allow them to lower their costs allowing them to provide you with more and better service for a lower cost. Has this ever happened? I can’t think of a single example.
The one truth is that mergers do allow businesses to reduce headcount therefore reducing their cost which at the end of the day will increase their profits.
Let’s get back to the airlines, and see if there are any positive changes that affect us.
Leg room has decreased between seats
You are charged for luggage that is checked now
In-flight meals have all but been cancelled and what they do serve is horrific
It is apparent that most flight attendants are exhausted and just want to get home
Flights are late more often due to poor maintenance on the planes
When looking for competing fares it is almost impossible to find them due to the airlines orchestrating where they fly to control competition and fares.
Getting a seat using your flight miles is very difficult.
I am sure you can name some more services that have declined as a result of all of the airline mergers that have occurred. These are some that come to my mind.
Now, Time Warner and AT&T are going to merge as is Comcast and Fox and I am sure Sprint and T-Mobile will join forces in the near future. No matter what anyone says all of these mergers reduce competition and at the end of the day it will result in higher prices for the same service and in some cases a reduction in services. Why, because it is easier to control the market and instead of worrying about 6 competitors now they only have to worry about 3 as an example.
There is not much we as consumers can do about it other than contact you Congressman or woman and let them know you object. Anything that lessens competition is almost always not good for the consumer.
Have a nice flight.