A long-shot megamerger between United and American airlines could reshape O’Hare International Airport and make flying more expensive and unpleasant for Chicagoans, aviation and antitrust experts told the Tribune.
United CEO Scott Kirby floated the idea of such a merger — which would create the largest airline in the world — to President Donald Trump earlier this year, Bloomberg and Reuters reported.
An airline industry megamerger is still a big “if,” experts cautioned. It isn’t clear if any formal merger proposal process is underway. And any merger proposal involving the two massive airlines would likely face an uphill battle when it comes to passing muster with federal regulators.
But O’Hare — where the rival airlines both have hubs and together control about 80% of the airport’s gates — could be an epicenter for impact if a merger did ultimately get the green light.
Chicago-based United and Texas-based American have for months engaged in a knock-down, drag-out fight over market share at the airport, adding so many flights out of Chicago that federal regulators have warned the airport lacks the capacity to keep up. A merger between the two airlines would cool that competition and could make air travel more expensive, experts said.
Spokespeople for both United and American declined to comment. The Chicago Department of Aviation, which runs O’Hare, also declined to weigh in.
Consumer advocates are typically highly skeptical of corporate consolidation, wary of reduced competition leading to higher prices and fewer options for consumers.
And airlines compete against each other not just on the basis of cost, but also on the quality of the service they offer, said Jim Speta, an antitrust law expert and professor of law at Northwestern University.
For instance, airlines compete on offerings like leg room and flight frequency, he said.
“So we might see changes in that regard between the airlines, where they’re not competing as hard to provide comfortable seats,” Speta said. “Or they’re not providing frequent service, or they stop flying from O’Hare to some small markets.”
A megamerger would reshape the flying landscape at O’Hare, which is in the early stages of a massive, yearslong and costly reconstruction project.
United and American have for months been engaged in a battle over the airport’s gates, which are allocated based on how much the airline flew the previous year. United is dominant at O’Hare, with just under 100 gates, while American has 66, according to the city’s Aviation Department.
The city has touted the gate reallocation process as one that promotes competition at the airport. The city has also bristled at the feds’ argument that there are now too many flights scheduled out of O’Hare, calling regulators’ plans to cut flights at the airport “regressive.”
A potential merger process would likely mean United and American would have to agree to give up some market share in areas in which they have significant market overlap in order to appease regulators, said Speta, the antitrust expert.
At O’Hare, that could mean requiring the combined United-American to reallocate some of its gates to another airline, Speta said.
“The question is what other entrant would come in,” said airline industry expert Brett Snyder. “It’s not clear who that would be, or who would be able to come in with enough heft to bother making it into a large operation.”
The bottom line?
“It would be very bad for competition in Chicago,” said Snyder, the founder of the industry website Cranky Flier.
Transportation expert Joseph Schwieterman of DePaul University’s Chaddick Institute for Metropolitan Development said a merger could come with some benefits, such as efficiencies created by the combined airline flying larger jets versus more numerous smaller ones. That could allow United to offer more premium services, like first-class seats, he said.
But the airline would likely feel less competitive pressure to offer discount fares, leading to fewer of those options for flyers, he said.
And a merger would likely create uncertainty around the city’s ambitious terminal expansion plan, he said.
“It’s hard to be an airport planner with these kinds of issues swirling,” Schwieterman said.
The union representing flight attendants at United — the Association of Flight Attendants-CWA — said in a statement that the union believed the merger talk to be “mostly bluster” but said it would “watch this very closely and take action as needed.”
“Clearly all across corporate America it is known that it is open season for consolidation,” the union said.
Dennis Tajer, a spokesperson for American’s pilot union, the Allied Pilots Association, indicated in a statement the union had some openness to consolidation discussions.
“The report is certainly intriguing,” Tajer said. “We have been very open about our concerns regarding American Airlines’ financial, operational and customer service underperformance under the current management team. We are always interested in and welcome ideas that will turn around our airline.”
Experts remain highly skeptical that the airline merger will happen.
“I think this has long odds,” Schwieterman told the Tribune.
But Trump’s transportation secretary, Sean Duffy, did indicate an openness to airline mergers in a CNBC interview earlier this month.
“President Trump, he loves to see big deals happen,” Duffy said April 7. “Is there room for some mergers in the aviation industry? Yeah, I think there is.”
Snyder said that under almost any prior administration, a United-American merger “would have been laughable … to the point where it wouldn’t have even been brought up.”
“It is impossible to imagine how this passes traditional antitrust scrutiny,” he added. “But we also don’t know that there would be traditional antitrust scrutiny.”
