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May 02, 2012
Brattle Principal Kevin Neels Quoted in Politico Article on Airline Regulation and Consolidation

Brattle principal Kevin Neels was quoted in a recent Politico article discussing the recent trend toward consolidation in the airline industry. In the article, “Stepping back on airline mergers,” Dr. Neels discusses regulation in the airline industry.

The article discusses Congress’ involvement in airline mergers that, to date, has been non-existent. The airline industry says that the market has too much capacity and argues that consolidation is necessary, while critics argue that consolidation puts too much monopoly power in the airlines’ hands. In the article, Dr. Neels argues that although consolidation may mean higher prices, poorer service or other cutbacks, “the alternative may be not to have an industry around.” Regulation, according to Dr. Neels, “tends to be very heavy-handed and politicized” and is often used as a blunt instrument for change.

Further, because the airline industry is heavily regulated for safety reasons, consumers tend to look to the government to fix its problems. “If your baggage gets lost, you write your congressman. But if your washing machine breaks, you don’t write your congressman,” said Dr. Neels. “There’s still a set of expectations that somehow the government ought to be able to fix this.”

To read the article in its entirety, please visit the Politico website.