Over at KRLD-AM (1080), our pal David Johnson landed an interview with former American Airlines chairman Bob Crandall about today’s developments. (The interview can be heard in full this evening at 6:20 on David’s CEO Spotlight program.) The always-outspoken Crandall told Johnson he was surprised by news that the Justice Department would attempt to block the American/US Airways merger. “The only unsurprising thing is that the government has once again made a very stupid move,” Crandall added. Then he offered this analysis:
“The airline industry has been heavy consolidated. The government some years ago … permitted the merger of Delta and Northwest, and they permitted the merger of Continental and United. And when they approved those two consolidations, they made a consolidation of American and US Air inevitable.
“… Delta and United have great advantages over US Air and American. They are much larger and, most importantly, they are far more ubiquitous. … So you’ve got these two very large and capable airlines that are competing with American and US Air … and consolidating them would have created a third major competitor to United and Delta.
“Not allowing them to combine effectively condemns US Air and American to compete on an un-level playing field, forever … The Justice Department now is telling the public … that it is protecting competition. What it is effectively doing is making competition impossible, and condemning the United States to having only two large, fully capable hub-and-spoke carriers, instead of three. That is nuts. It makes no sense.”
