Mar 192013
 
 03/19/2013  Posted by at 1:00 am Blog, Mark, News  Add comments

Mark Briggs Phoenix Lawyer Says the Merger is Bad Business for Arizona

Mark Briggs Phoenix Lawyer comments on the recently announced airline merger:

Ever since US Airways merged with America West back in 2005, the airline has had a glowing relationship with Arizona. Its headquarters are located in Tempe, and boasts a hub at Phoenix Sky Harbor International Airport. But when US Airways and American Airlines executives announced this past Valentine’s Day that their companies would be merging, I couldn’t help but grow anxious for his home state.

A recent article in the Arizona Republic did an excellent job of investigating the fallout from some past airline mergers, including Northwest’s merger with Delta and last year’s United-Continental merger, and the findings were pretty unsettling. As the article states, “…a post-merger look at the two cities that lost their corporate headquarters, Houston and Minneapolis, suggests that although Phoenix might get a new destination or two, the state will lose jobs and that Sky Harbor will see fewer flights as the airlines work to make their operations more efficient.” What’s more, those two cities saw decreases in their number of domestic flights offered by the newly merged airlines, and also took a to-be-expected hit to their local economy.

Clearly, Arizona losing another corporate headquarters is a step in the wrong direction—we would suffer job losses, diminished corporate support for community enrichment, and general prestige. But the repercussions of this merger could reverberate throughout the state’s economy more widely than past losses. Arizonans are likely to see a decline in available airline service, which will translate into higher airfares for vacation, tourism and business travel. And that could mean trouble for a wide swath of Arizona businesses.

The Phoenix metro area has only six Fortune 500 headquarters and with the loss of US Airways it will soon be down to five. I think we can do better. Some suggest the solution is in luring Fortune 500 headquarters to Arizona, but I think that is largely a waste of time and money. In my opinion, our state would be far better off in the long run if we took steps to foster an environment that supports the creation of our own Fortune 500 companies.

So, how do we go about doing this? On the business side, we should start by simplifying our tax code, creating incentives for venture capital firms to open offices here, and putting a small percentage of our state and local governments’ retirement funds into Arizona-centric business investments in profitable, smart ways. On the human side, it means improving the quality of life we can offer to “creative class” workers and entrepreneurs—through more walkable urban centers, an emphasis on arts and culture activities, and an improved education system. If we act now, then perhaps our children will live in a state with dozens of large companies headquartered here, and their generation will be able to view this merger as just another great Arizona moment.

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