“BBA Aviation Buys U.S. Rival Landmark for $2 Billion” (WSJ) explains that if you want jet fuel at the busiest airports you’ll now have one source, Signature, instead of two (Signature and Landmark). Why wouldn’t the antitrust regulators whose salaries and benefits are funded by our tax dollars object to this reduction in competition? “Mr. Pryce said the market remains highly fragmented and that he didn’t expect regulatory hurdles.”
Is the market truly fragmented? Well… if you’re going from Boston to New York City and you want to stop for fuel in rural Pennsylvania you can get a great deal on jet fuel from an independently owned and/or municipal supplier. If you want to land and fuel at, for example, Westchester, however, you’ll see that there are currently just three choices: Landmark, Million Air, and Signature. Due to current vibrant competition, the listed price on Airnav is about $7.40 per gallon at Landmark and Signature. Compare to nearby Danbury, where the runway is a little too short for Landmark and Signature to be interested: $3.50/gallon. In other words, they’re already able to command insane profits at Westchester.
This merger makes as much sense to me as letting Comcast and Time-Warner join forces… (previous posting) Why is it that so few Americans are interested in the “competition” requirement that makes the rest of Econ 101 potentially relevant? Typical Americans don’t own Gulfstreams, of course, but Americans who own shares in public companies or who buy insurance from mutually owned insurance companies do pay for jet fuel to go into Gulfstreams.
[Separately, Signature is owned by a foreign company. So this means that the profits that Signature obtains by limiting competition will be sent over to England.]