Share

POLITICS: PennAve

Justice Department, states look to block merger of US Airways, American Airlines

By |
News,Business,DC,Brian Hughes,Justice,Eric Holder,PennAve

This article has been updated, 1 p.m. Tuesday, to add the Justice Department lawsuit's comments about Ronald Reagan Washington National Airport.

The Justice Department, six states and the District of Columbia filed a lawsuit against the merger of US Airways and American Airlines Tuesday, looking to block a deal they say would reduce competition for flights and significantly raise airfare.

“Because of the size of the airline industry, if this merger were approved, even a small increase in the price of airline tickets, checked bags or flight change fees would cause hundreds of millions of dollars of harm to American consumers annually,” the complaint, filed in U.S. District Court for the District of Columbia, reads. “Millions of passengers each year benefit from head-to-head competition that this merger would eliminate. With less competition, airlines can cut service and raise prices with less fear of competitive responses from rivals.”

Joining the Justice Department in the civil suit are the District of Columbia, Arizona, Florida, Pennsylvania, Tennessee, Texas and Virginia.

According to the lawsuit, the proposed $11 billion merger would create the world’s largest airline but also unfairly punish competitors — and result in four airlines controlling more than 80 percent of all air travel.

The merger between US Airways and the parent company of American Airlines, which filed for bankruptcy protection in November 2011, was announced in February. If the deal is approved, the four biggest airlines — American, United, Delta and Southwest — would be the products of mergers that began in 2008.

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

At the heart of the complaint is the impact the merger would have on the Washington region — specifically flights that federal officials and lawmakers take to and from Ronald Reagan Washington National Airport. House lawmakers, for example, argued that such a merger would effectively end nonstop flights back to their districts.

According to the lawsuit, US Airways now controls 55 percent of the slots — government-issued rights to take off and land — at the airport, which is just five miles from Capitol Hill. If the merger were approved, the airline would hold 69 percent of the slots and have a “monopoly” on 63 percent of nonstop routes out of the airport, the Justice Department argued.

“Competition at Reagan National cannot flourish where one airline increasingly controls an essential ingredient to competition,” the lawsuit says. “Without slots, other airlines cannot enter or expand the number of flights that they offer on other routes. As a result, Washington, D.C., area passengers would likely see higher prices and fewer choices if the merger were approved.”

View article comments Leave a comment
Author:

Brian Hughes

White House Correspondent
The Washington Examiner