Justice Department sues to block US Airways and American merger

The U.S. Department of Justice filed suit on Tuesday in an attempt to block a proposed merger between American and US Airways.

The U.S. Department of Justice filed suit on Tuesday in an attempt to block a proposed merger between American and US Airways. Photo courtesy of US Airways.

Almost no one who regularly covers aviation saw this coming. I certainly did not.

The U.S. Department of Justice filed an antitrust lawsuit on Tuesday in an attempt to stop a proposed merger between American Airlines and US Airways. Federal officials were joined by six state attorneys general and the District of Columbia. According to U.S. Justice Department officials, the proposed $11 billion tie up would lessen competition, resulting in higher airfares and lower levels of service.

The complaint states that, if the merger goes through, four airlines would control 80 percent of the nation’s air travel market. Justice officials say it would be particularly detrimental to competition in Washington, D.C. where the new American could control 69 percent of takeoff and landing slots. (It’s certainly possible that, if the merger does go forward, the new airline would have to divest itself of some of those slots.)

The complaint also notes that US Airways, which considers itself a Low Cost Carrier, has considerable influence on prices charged by the three major network airlines — United, Delta and American. With that influence gone, federal officials say, fares could rise.

“Today, US Airways competes vigorously for price-conscious travelers by offering discounts of up to 40 percent for connecting flights on other airlines’ nonstop routes under its Advantage Fares program,” the Department of Justice wrote in its release. ” The other legacy airlines – American, Delta and United – routinely match the nonstop fares where they offer connecting service in order to avoid inciting costly fare wars.”

As a reporter, it’s not my place to make judgments about whether the Justice Department, made a mistake or acted corrected by trying to block this merger. But I’ve culled some Tweets from industry sources and reporters I follow, so you can see how they reacted.

 

 

 

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