United and US Air: No Sale?

Wall Street Journal: United may face antitrust hurdles. The merger, which would make UAL Corp.’s United the world’s largest air carrier by far, also faces rising political opposition fueled in part by consumer complaints about high air fares and poor service. A congressional investigation to be released Wednesday found that the deal would reduce or eliminate competition in 290 U.S. markets, in which 16 million passengers traveled in 1999.

As an all-too-frequent customer of United, and victim of the airline’s poisonous labor relations on domestic flights earlier this year, I can’t imagine a worse thing for the flying public than this merger. It would quickly cause the remaining large airlines to merge, leaving us with three mega-carriers that would be able to treat their customers with even more disdain than they do today.

The airlines point out that they’ve been in a money-losing business until recently. But they’ve made up for it with incredibly fare hikes in the past several years. They’ve adopted computer reservations methods that squeeze the most revenue out of their seats — far more efficiently than ever before. They are not hurting anymore.

Now they want to have this cozy oligopoly. They shouldn’t get it. We’ve seen the results of oligopoly in other areas, and consumers are the ones who lose.

I used to write about the airlines when I was a reporter in Detroit. Even the best one have nasty management, with the possible exception of Southwest Airlines, which keeps defying the rules in wonderful ways. They have carved up landing slots at the major airports in ways that give individual carriers vast dominance locally. Anyone who thinks it’s more than a remote shot in the dark to launch a competing airline is not aware of the anticompetitive tactics the major airlines use when an upstart dares to give it a try.

The nation needs more than three major airlines. It’s a simple as that. The federal and state antitrust people need to stop this merger. Period.

Property Values, Up Forever?

Mercury News: Bay Area median home price reaches record high. A predicted slowdown in Bay Area home sales and home prices did not materialize in November, as the median price reached another record high and the number of homes sold was well up compared to November of 1999.

Housing prices are a trailing economic indicator, based on wealth and perceived wealth and prospects for the future. When Silicon Valley and the Bay Area return to rationality, it’s going to be very, very ugly for the people who bought at the top of this insane market.

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