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New American Airlines Means 'Big 4' Control US Skies

Thursday, 14 Feb 2013 | 1:06 PM ET
AMR, US Airways Formally Announce Merger
The AMR/U.S. Airways deal has a combined equity of $11 billion, reports CNBC's Phil LeBeau.

The deal is done. Now the question is whether people flying in the United States are ready for a new era in U.S. Travel. Think about this, once the merger of U.S. Airways and American Airlines is completed 87 percent of the commercial flights in America will be flown by the four biggest carriers.

That's right, it won't be long until nine out of ten U.S. flights are operated by American, United, Delta and Southwest.

Despite that concentration of flights, the CEO of the new American, Doug Parker, thinks the competition will be good for flyers. "We think it's great for consumers. Between our two airlines there are over 900 routes that we fly. On those, there's only overlap in 12."

Fewer Airlines Doesn't Mean Higher Fares

For years consumer advocates have decried the merger of airlines claiming the loss of competition leads to higher fares. While there are some cases on specific routes where fares have risen when the market is reduced to only one carrier, most mergers have not lead to major increases in air fares. (Read More: AMR, US Airways Merger Good for Customers: CEOs)

That has largely been due to the growth of low cost carriers like Southwest and their ability to keep competitors from raising fares.

So what will happen with American?

The expectation is for fares to gradually increase in 2013, but not substantially. "Today, there are two very large airline in Delta and United. This creates a third competitor that's as large," said Parker. "We think it increases competition, so we see no issues what so ever with regulatory authorities." (Read More: American and US Airways Merger Create World's Largest Airline)

—By CNBC's Phil LeBeau; Follow him on Twitter @LeBeauCarNews

Questions? Comments? BehindTheWheel@cnbc.com

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