One thing that the Department of Justice attempted to ignore in its assessment of competition on routes in the US Airways / American Airlines merger was Southwest Airlines.  They also ignore other LCC carriers such as jetBlue but Southwest is specifically ignored in its complaint for its lawsuit.

Quick!  Who flies more Revenue Passenger Miles than anyone else in the domestic United States?

Southwest Airlines.

Southwest is a nationally dominant airline competing in all the large markets at this time and doing so quite well.  But the DoJ dismisses Southwest both as an airline as well as its influence on city-pair routes.  Let’s be clear:  The DoJ doesn’t just relegate SWA to a minor player.  It ignores SWA at all in its competitive analysis.

American Airlines is, for instance, presumed to have no competition in Dallas / Fort Worth.  For those of us in Dallas / Fort Worth, this comes as a complete shock.   I myself have frequently written about how Southwest is both price *and* time competitive on the Dallas-Fort Worth / Chicago run.  Notice that SWA is dominant at both Dallas Love Field and Chicago Midway airports?

Ignoring Southwest Airlines is kind of like ignoring that large 18-wheel truck in the lane next to you as you travel down a highway:  you can do it but you do so at your own risk.

Many speculate that the DoJ must have had strong reasons to define SWA and jetBlue out of the market for their analysis.  I strongly suspect that without doing so, they had no argument of strength to make against a merger.

And once you start carving up the rules so you can achieve the outcome you want, bad things happen.

Filed under: Mergers and Bankruptcy by ajax