go to aljazeera.com. it's throttle up for the megamerger that will combine two airline into the biggest carrier in the nation, what that means to you as our inside story. hello, i'm ray swarez. if there was any doubt another major airline merger could limit competition, just look at the demands the justice department made of the new soon to be megacarrier american airlines. in order to become one with us airways in a multibillion dollars

deal, american must agree to open up major hubs to smaller airline carriers, cut back on roots and the number of flights, in an age of fees and baggage costs and expensive no frills tickets what will the future of air travel look like you to you the son caller as the new american airlines takes on. the americaner between america and u.s. airways is a $17 billion deal. it would carry 100 million passengers annually. it will. the justice department announced the settlement that will allow the new american airlines to become the king of the airways. in the agreement, the air land must give up gates and landing slots including new york, los angeles, and ronald ragan washington national airport. washington, d.c.

at ragan airport, american must now sold 104 landoff and taking slots. >> we have expressed the concerns that the merger would potentially impose. >> the justice department initially blocked the deal, fearing it would hurt competition. and after securing concessions the deal was cleared for takeoff. >> eric holder sought to reassure fliers. this has the potential to shift the landscape, by guaranteeing a bigger foothold for low cost carriers this settlement insures airline passengers will see more competition on nonstop and connecting routs throughout the country. the passengers still have concerned. >> every time there's a merger there's a rate increase. >> with less competition, it means that it may

drive flight rates up. >> in 28, delta joined forces with northwest, in 2010, united couples with continental, and two years ago, two of the smallest carriers southwest and air tran merged as well. all of these mean there will now be four big carriers controlling 70% of the domestic travel in the united states. countying us now, and the ceo of compare compare, dedicated to getting the best flight deals. in the studio, the executive director of the national association of airline passengers and from minneapolis, terry trip, an aviation analyst who run as consumer website called the plain rules. let me start with you, this was not looking good, this merger, then suddenly the clouds

parted the impediments disappeared and they were back in business. what did the two carriers have to do to get attorney general holder's blessing? >> well i think they started picking at it. the attorney generals got them to flip some of their positions on things. based on things they wanted to handle and then slowly but surely, you could tell last week, when southwest file add brief, that they were really talking turkey on what kind of settlement they would have, and i didn't expect it to be this soon. i thought it was going to go right up to the wire. blue i think there's close to 30 to thousand employees that are happy this got settled. >> why would they be happy? >> in the case of american, i live in dallas where it is based. there's been acrimonyny for a long time. they really wanted this to occur.

in the case of us airways i'm not sure they were as giddy about it. certainly in many cases if they were coming out of bankruptcy, it would be a much more difficult time against two other megaairline. so they have more job security? >> i think they will be doing some growth. there will be certain cities are there is cut backs but it looks like the settlement also includes this three to five year window where they can't cut back in certain cities are they would like to earlier than that, but that's part of the settlement. >> douglas kidd, what about the flying public? what is their view? >> well, the flying public has one interest, and that's being able to fly and of course flying on an airplanes that is not facing bankruptcy. and that it is hopefully will be making money and will be in a position to treat the incumbent and the passenger correctly.

when an airline is facing financial difficulties there's a tendency to pink pennys and it's one thing to go from peanuts to pretzels it is quite another when with american airlines has receive add number of proposed fines from the faa for neglecting maintenance. and that's really important. so to the extent that this merger can resolve those issue that flying will remain safe and comfortable. then of course the passenger is for it. >> if you want to fly from anywhere to anywhere, has been fewer seats, somewhat higher fairs, lower level of service. and more fees will any of that change with this new american bigger american airlines? now threamines to be seen. as you say, there are fewer seats. the planes are more and more frequently fully sold out.

and of course anybody in business has to wonder if the airline are filling the seats. on their flights and still having financial difficulties there's something seriously wrong. >> was this a good deal for all the stakeholders involved? the carriers and the flying public. >> i think absolutely. i think this is truly one of those win-win situations. i have been in this business 45 years and i think i have seen 20 mergers in that time. way with have always heard the same story, less competition fairs go up. but in 99% of the time, it has ended up being good for everyone, and in this particular situation, this is good for united. delta, and american, because it gives the united states three truly giant global carriers

that they can have to compete with the international carriers. many of whom are subsidized by their government. why sit a good thing, that these two big carriers merge to become one giant one. >> i believe that high tide raising all boats. and when you put three giant u.s. trance global carriers from the united states, it gives everybody a push. it gives everybody a levels of playing field for u.s. airline pliable against other airline. whether it be delta, united or america. i believe everyone will benefit from this. it is like if you have a restaurant and another one moves in you are ham pilot because it draws more people. this will be times of the year that business may be down particularly internationally.

and now you have three global airline who will slash prices and offer real deals across the world. so this will be big for them, the one of the biggest airline is southwest airlines. this will grow as fast as it wants to. as fast as it can get aircraft along with jet blue. i see this as a win win for everyone. >> well, you have layed out a lot for us to think about, and talk about, terry, we will come to some of these propositions in a moment, more with our guests in a moment, you rah watching inside story, stay with us. >> al jazeera america is the only news channel that brings you live news at the top of

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continuing our our conversation on the big airline meer. the ce oh, of fair compare, the executive director of the national association of airline passengers and terry triplet, an aviation analyst who run as consumer website called the plain rules. just before the break, the way this could be good for all the stakeholders involved. but we have already been living through an era, have they done any of the things that terry suggests? >> i am not sure if they have. the primary benefit is they have kept carriers in business. as the market has consolidated. now, while the business -- the carriers are in business, and we want them to stay in business, we want them to make money, and provide good

service, there has been to my mind, especially among the u.s. carrier as focus more on making money, rather than pleasing the passenger. and in this regard, we know that going the airport has become almost like going to a carnival, where you step up, you get your boarding pass, and then you get hit with fee after fee, and then you go through airport discusser which is a whole another story, and then you get to your gate, and finally, you get on a plane, and shoo horned into a space, that is too small for the average individual, so it's not much fun for passengers. >> rick, help us understand what is going on here with the economics of running an airline? p . you fly a lot, there's rarely an empty line. the fees have gone up, and right now fuel prices have moderated.

why is it so tough for them to make money on a ticket? first of all, if you ask an aaron ceo on 2006, could you survive for any length of time at $100 an hour barrel oil, and they probably would have laughed you off the face of the planet. and airline in many cases are sometimes their worst enemies they wanted to grow bigger taj they could grow to do things. they wanted to have a business model where only two-thirds of the plane was full. and by the way, that's a good business model if you have a lot of loyalty points and you want to fly for free, now all these points as part of the pinchers are being watered down, because there's no seats to give away.

i would say in general, airline now are on a road for financability stability, the question is will we will be sitting here saying i wish i had eight megaairline instead of four. one of the common places is that people who live in big markets and fly out of major hubs probably are going to be all right, and you hear the loudest squawks from people that live in either small cities or places well away from the big markets. is that going to be the case with this merger? >> well, i think like with all mergers it will be the case, but it isn't just the merger that is causing that, i was born and raised in south dakota, where at one time, there were nine airports served by airline in south dakota. there are three or four. and what it is, is to be totally honest, i grew up where i have -- we had to drive 60 miles to go to a movie. we chose to live there. we with chose to live

60 miles away from a movie. so some people in washington, or oregon, or indiana, should not be subsidizing me because i had to drive so far to get to a move i have. and i feel the same way about the airline industry. and transportation, that if i -- if we had to drive to sioux falls to get on an airplane, sobeit. that's the way it is. mitchell was much closer but they had to subsidize to fly there, and then eventually they wore out, and they quit serving it. we can't be serving every small city in america that wants it. what we have had happened and a good example is air tran. air tran was flied to mobile alabama, and they decided they were going to drop them because one thing about low cost carriers when they can't -- when they don't make money on an airplane, they pull it, and they pull it out and move it someplace else. where, they are deciding that they are going to quit serving mobile alabama. mobile alabama chamber of

commerce jumped only an airplane, got businesses together, flew to air tran's head effort yeaher and promised them they would support the airline. gave them concrete promises of an o. of money they would spend. air tran backed off. a year later, air tran has to withdraw from mobile, because they did not have the business that they needed to have it. it is just the way it is. it's the way we live today, it isn't like r exa where every farm was given electricity and that was all subsidized. what would be a luxurious way to travel has become mas. transit, and available out of the major cities. pierre, etc. >> in the days before deregulation, those bad old days before deregulation, one of the

trade offs was that carriers would service these smaller markets because they were guaranteed certain access to the larger markets. and the economic model worked out. now some of the places that terry flames as an example, instead of being served by three carriers are served by one, and you are basic my at the mercy of what airline wants to charge. >> a it is true, and it is troublesome because you take a look and say well, i can fly from coast to coast then i can go from one small city up to a major hub. i should say this, that all the airline in this country serve the public. yes, they are private business, they are in the business of making money, the we want them to make money, but there's also a public trust.

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consider this: the news of the

i'm phill torez. coming up this week on techknow. san francisco's bay bridge,

an engineering marvel but this is earthquake country. >> how close are we to one of those faultlines? >> now inovation, that might change everything. >> how safe is this building? >> earthquake inovations, >> where would you wanna be if a big quake hits? >> techknow sunday 7:30 eastern on al jazeera america rick, can the united states government ever say no to a americaner now that they have said yes to this one? after they were so opposed to it at the beginning? does this clear the way for even more consolidation. >> i think you hit it on the head, i am not sure there's any dance players to consolidate. but i think if you look at the case that the d.o.j. brought, they basically -- the crux was these small cities of

which there's between 120, and 150 of them, that are between and four hours away, will only end up with one carrier. when this is all said and done. after this is the fourth megamerger in five years. and those folks will take it on the chin. not just a family of four that has to drive four hours. but also businesses in those areas that we would like to support for example. which is really the crux. we knew they would take slots oout of ragan and la gourd yeah. that's what happened in the other mergers. i would also note that low cost airline -- by the way, u.s. airways is basically america west. it is a low cost airline, removing it from these locations and replacing it with jet blue, and southwest airlines, suspect going to drop prices at all. if anything, it is going to be a trade off.

so in those airline certainly aren't going to fly to regional cities that's not part of the business model. >> what does this mean for the carriers that are serving ren joes? >> the sun countries how do they fit in this environment? >> rick, first you. >> yeah, i would say that -- what they do is they end up being merged in or in the case of frontier, they are being spun out. they are going to be very niche airline, and you can build a business model in these fringe markets.

and then niche airline have very specific markets and regions are they can make money, and that's basically what you will end up with in the united states. >> terry, go ahead. >> i have to disagree with rick on this. i feel that if you have a city and this cityn't ways 10,000 a year, someone will be there to fly them. if you want to get from point a to point b, in the united states, you are going to be able to get there. now this is the way it has always worked. the free enterprise system does take over. when we look at the operation, what people fail to realize, is that government regulation, the regulation of the airline is what caused the hub operation. they protected the airline from competition. they wouldn't let an airline fly where it wanted to. or charge what it wanted to charge. the cab, and said no, you can't go there. you can't charge this, there were no sales. no frequent flier programs. no advance purchase.

no nonrefundable tickets. it wasn't until jimmy carter said let's deregulate this industry, that the industry then broke lose and yes, when rick brought up america west, it is the only airline of the first wave of new airline that have cropped up right after deregulation, there's two waves america west is the only one that survived. and the only area i look at is management. i know the management of u.s. air waves i know what they have accomplished since they merged with american west. i know how they operate, and i don't think anyone can deny that we have seen them grow better and better than we have seen with delta. you know the management, i know the management at

us airways. i know what they and will do, and i know what southwest can and will do with remaining slots. so i believe that a year from now, a year from now, we can say wow this was a good merger and it is just getting started. >> douglas, you just heard his tribute to deregulation and its effects. yet the people i see in airport, and i fly about 75 to 100,000-mile as year, don't seem very happy. that is a matter of concern. because you are not talking about routs and plains you are talking about people. and how the airline are run by their top management, their misdemeanorle management. their line workers it all effects the passenger. and good management, goo leadership have a real effect on the airline. and likewise, poor management, poor

leadership can have a devastated effect as well. this is what makes the difference between taking a trip, and enjoying your flight, or taking a trip and having a perfectly off time, and saying i will never fly that again. rick, before we go, a lot of people are probably asking what happens to my miles that i earned on one or the other? where are they going, and where is this new merged airline going to go? into one world, or star alliance. >> yeah, this is -- so basically it is the new american. so they are going to be staying with the one world alliance, u.s. airways will move from the star alliance into the one world program. now, their elitele pas are different, they will have to merge them together. but what airline have done through the past three or four megamergers is aired on the side of actually upgrading the loyalty programs because the last thing they want to do in these mergers is

ail len nate their highest paying customers. so i expect that to be more painful for the folks that are loyal to us airways because they are moving in a different program, probably just the same for those folks that are really close to over 100 million folks in the advantage program. >> that's it for now, from the team in washington, d.c. and from me ray swarez, but you can keep the debate going by logging on to our facebook page, or you can send us your thoughts on twitter, our handle is a.j. inside story, am. or you can reach me correctly, at ray swarez news. thank you for joining us, thanks to my guests, good night.