Los Angeles mayor Eric Garcetti supports a controversial proposed merger between American Airlines and US Airways that would create the largest airline in the world, an administration official told me on Wednesday.
The U.S. Department of Justice has sued to block the tie-up, with government lawyers arguing it will be bad for airline industry competition and that fares in many markets likely will rise. American and US Airways have been mounting a challenge, both legally and politically. Recently, airline officials have been lobbying elected leaders in key areas to go on the record in support of the merger. (In one major victory, American and US Airways persuaded Texas Attorney General Greg Abbott to drop his state’s participation in the Justice Department Lawsuit.)
American has a major operation at Los Angeles International Airport, one of five cities nationwide at which it operates the bulk of its flights. The others are Dallas, New York, Miami and Chicago.
“We support the merger,” Garcetti spokesman Jeff Millman told me in an email. “Bringing together these companies creates a better network that will carry more passengers through Los Angeles Airports, creating jobs and economic activity in the process.”
I reached out to Millman today after the two airlines released a letter signed by seven mayors in American and US Airways hub cities urging U.S. Attorney General Eric Holder “to reconsider this ill-conceived lawsuit.” Garcetti was not one of the mayors on the letterhead.
“…Failure to clear the combination of American Airlines and US Airways will put our cities at an unnecessary competitive disadvantage to Atlanta, Newark and other hubs that directly benefit from the Delta and United mergers,” the seven mayors wrote in their letter.
Read on to see the letter, which was signed by the mayors of Chicago, Philadelphia, Fort Worth, Dallas, Miami-Dade County, Phoenix and Charlotte.
October 23, 2013
The Honorable Eric H. Holder, Jr.
Robert F. Kennedy Building
950 Pennsylvania Avenue, NW
Washington, D.C. 20530-2001
Dear Attorney General Holder:
As mayors of some of the largest cities in the United States, we know the airline industry creates jobs, supports local business, attracts new business, and promotes infrastructure growth. Nowhere are these benefits more apparent than in cities—like ours—with airline hubs. But the Justice Department’s recent action seeking to block the combination of American Airlines and US Airways puts those benefits at risk for Charlotte, Philadelphia, Phoenix, Chicago, Dallas, Fort Worth and Miami-Dade County. We write to ask you to reconsider this ill-conceived lawsuit.
We support the merger of American and US Airways because it is based on growth which benefits consumers and our communities. A hub airport is only as good as the route network it supports, and our cities represent hubs throughout the United States that would benefits from a broader route network. The combination of American Airlines and US Airways creates a better network than either carrier could build on its own. American’s substantial operations throughout the central United States provide critical coverage where US Airways is underdeveloped. US Airways’ substantial operations throughout the Northeast do the same for American. Bringing together these complementary operations creates a better network that will carry more passengers to, from and through Charlotte Douglas International Airport, Philadelphia International Airport, Phoenix Sky Harbor International Airport, Chicago O’Hare International Airport, Dallas/Fort Worth International Airport and Miami International Airport. This increase in passenger traffic will multiply the beneficial effects those airports have on jobs and our local economies.
Without this merger, American and US Airways will be at a permanent competitive disadvantage to Delta and United, each of which has been allowed to build superior route networks through mergers that were cleared by the Justice Department, the latter under your watch. The long-term prospects of American and US Airways will be imperiled. But even worse than the impact on the merging companies, failure to clear the combination of American Airlines and US Airways will put our cities at an unnecessary competitive disadvantage to Atlanta, Newark and other hubs that directly benefit from the Delta and United mergers.
You need not rely solely on our view. You also have another independent verification of the procompetitive benefits of the American Airlines US Airways merger, and that is the reaction of the companies’ employees, particularly organized labor. The unions at both airlines share our goal of job growth and our view that procompetitive mergers increase jobs. They also have a deep understanding of the airline industry’s competitive landscape, aided by the participation of the American unions in the Unsecured Creditors Committee as part of American’s bankruptcy. Now they have joined together with the companies to support the new American Airlines. This is unprecedented. Such a constructive approach between employees and management should be applauded by the Administration, not challenged.
By attempting to block the proposed combination, the Department has needlessly added to the uncertainty that these employees and their families must endure and has put jobs at risk.
Our cities rely on the airline industry to support existing businesses, attract new businesses and to keep our local economies moving forward. The health and well-being of our cities and our citizens depends on this combination moving forward.
For these reasons, we ask you to settle your lawsuit with American Airlines and US Airways and allow the combination to proceed.