DOJ challenges US Airways and American Airlines merger

Posted By KRISTEN BUTLER,  |  Aug. 13, 2013 at 11:24 AM
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A proposed $11 billion merger between US Airways Group Inc. and American Airlines’ parent corporation, AMR Corp. has been challenged by the Department of Justice, six state attorneys general and the District of Columbia in a civil antitrust suit.

The merger would result in the world's largest airline, and according to DOJ, "would substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service."

States participating in the challenge are Texas, where American Airlines is headquartered; Arizona, where US Airways is headquartered; Florida; Pennsylvania; Tennessee; and Virginia.

"By challenging this merger, the Department of Justice is saying that the American people deserve better," said Attorney General Eric Holder. "This transaction would result in consumers paying the price -- in higher airfares, higher fees and fewer choices."

Last year, $70 billion were spent on airfare for travel throughout the United States. In 2012, domestic airlines generated more than $6 billion in fees from checked bags and flight changes alone.

"If this merger goes forward, even a small increase in the price of airline tickets, checked bags or flight change fees would result in hundreds of millions of dollars of harm to American consumers," said Bill Baer, Assistant Attorney General in charge of the DOJ’s Antitrust Division. "Both airlines have stated they can succeed on a standalone basis and consumers deserve the benefit of that continuing competitive dynamic."

According to the department’s complaint, the merger would result in just four airlines controlling more than 80 percent of the United States commercial air travel market.

The merged airline would also be the dominant carrier at Washington Reagan National Airport, with control of 69 percent of the take-off and landing slots. It would also have a monopoly on 63 percent of the nonstop routes out of Reagan, potentially increasing the cost of travel to and from the capital.

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