"What about a time factor? Is there any reason we're seeing all these merges now? Deregulation's been with us since 1978. Why now?"
"I think there are a couple of reasons why there are so many airline merges now. First of all, there's sort of a herd mentality. When United picked up Pan Am's Pacific routes earlier this year, that set off a ripple effect. Northwest said, well, we're going to buy Republic in order to get bigger and compete, TWA Ozark, etc. etc." There really is a wave. Secondly, there's the perception in the industry that the Department of Transportation which has to approve airline mergers, is more lenient than the Justice Department would be. But D.O.T. only has that authority for another two years. And there's concern that if you don't do it now, the Justice Department may stop you if you try a couple years from now. The third reason is related to the tax bill. The tax bill that's pending in Congress will take away some of the benefits that make mergers easy to finance, staring on January 1st. So I think you're going to see a number of mergers in a lot of other industries as well between now and December 31st.
"When deregulation came into being, there was a lot of talk that what would happen is, you would have four or five major airlines, a number of very successful regional airlines and the commuters. It seems as though that trend is here."
"We seem to be headed in that direction, and it's unfortunate. I mean, deregulation was supposed to be more airlines competing for consumers' business, not fewer. There is inevitably …"
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