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The DOJ and the Airline Oligopoly

A few months ago, the Department of Justice gave into the demands of Douglas Parker, the CEO of US Airways, and Tim Horton, the then CEO of American Airlines. The decision by Eric Holder to allow these two major airlines to merge after the DOJ had already allowed the mergers between Northwest and Delta, United and Continental and AirTran and Southwest to take place have caused average consumers and frequent flyers in the United States to hurt when booking future travel plans.

The last few years, airfare has gone up and so have airline fees. The government itself has not helped because it has increased taxes and government imposed fees for flyers too. Two years ago I used to pay $150 for a round trip flight between Miami and Washington, D.C., today I pay between $252-280. The government has single-handedly created one of the biggest oligopolies of recent times by allowing there to be four major airline carriers: American, Delta, United and Southwest. Last year, Delta announced a revenue requirement for elite status and United shortly followed. Today, Delta announced a revenue based frequent flyer program and I am sure American and United will soon follow. Southwest has been revenue based for some time now.

I can predict that within the next year or two, flying will be more expensive and flyers will (obviously) earn less perks for flying and being elite members. These airlines that are part of the oligopoly will make Spirit Airlines look like a safe haven for consumers. All I can say is that today we have witnessed the beginning of the end of travel reward programs. Credit cards that give you airline miles or hotel points will soon enough be obsolete because they will take forever to add up.

In sum, all we can do is thank Eric Holder, the Obama Administration and their predecessors for allowing these companies to hurt consumers by shrinking market availability to low fares.

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