At this month’s Wings Club meeting in New York last Thursday, Tony Tyler, CEO and Director General of IATA, the International Air Transport Association, spoke about governmental interference in the airline industry and the attempts by governments to micro-manage carriers. He indicated that “our biggest challenge comes from governments that are engaging in what I would broadly describe as regulatory backtracking.” He went on to indicate that governments “appear determined to hold commercial aviation to a different business standard than they impose on any other form of transportation or consumer facing activities.”
During that speech, and being in the United States, he had the opportunity to focus on the Department of Justice lawsuit opposing the American Airlines – US Airways merger, and had some frank and interesting comments.
Mr. Tyler said that “I am not an expert on US antitrust policy, but I do know something about the airline industry and I have to agree with those in the investment community and elsewhere who have found DOJs arguments to be unpersuasive.” He went on to highlight their “faulty reasoning” citing a DOJ statement that there were nine major airlines in 2005 and if the merger were approved there would be only four, but pointing out that they failed to recognize that four of those airlines were in bankruptcy.
Having previously approved mergers between Delta and Northwest, United and Continental, and Southwest and AirTran, the DOJ brought suit against the AA-US merger that is scheduled for trial November 25th. Mr. Tyler, when asked about the upcoming trial, said that “I have no doubt that common sense will prevail and the merger will go ahead. It seems to me extraordinary that there could be any other outcome.” We concur with his assessment.