Airlines, BTC Respond to Suit Against American-US Airways Merger
American Airlines and US Airways will defend their merger, which is being challenged by the Department of Justice, while the Business Travel Coalition applauded the Justice Department's opposition to the merger.
The U.S. Department of Justice, along with six state attorneys general, filed an antitrust lawsuit Tuesday that challenged the airlines' proposed merger, asserting that such a move would substantially lessen competition in the U.S., resulting in higher airfares and lower service levels for consumers. The six attorneys general participating in the suit are from Texas, where American Airlines is based; Arizona, where US Airways is based; the District of Columbia; Florida; Pennsylvania; Tennessee, and Virginia. "If this merger goes forward," said Bill Baer, assistant attorney general in the DOJ's antitrust division, "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. Both airlines have stated they can succeed on a stand-alone basis, and consumers deserve the benefit of that continuing competitive dynamic."
According to the department's complaint, a merger would result in the combined airline controlling 69 percent of take-off and landing slots at Washington D.C.'s Reagan National Airport and operating 63 percent of nonstop routes from that airport. What's more, four airlines would control more than 80 percent of the U.S. commercial air travel market.
In response, American and US Airways issued a press release saying they would "mount a vigorous and strong defense" to the DOJ's effort to block their union. "We believe that the DOJ is wrong in its assessment of our merger," the release states. "Integrating the complementary networks of American and US Airways to benefit passengers is the motivation for bringing these airlines together. Blocking this procompetitive merger will deny customers access to a broader airline network that gives them more choices." American and US Airways stand by the idea that combining their routes would make the merged airline more competitive with other major carriers, thereby increasing competition.
For its part, the Business Travel Coalition responded "very positively" to the suit, noting in a statement that the "DOJ shines a spotlight on how uncompetitive and cozy U.S. airlines have become."
"As BTC testified in Congress regarding the merger," said BTC chairman Kevin Mitchell, "there is a coordinated airline war on consumers and price transparency."
In a letter to American Airlines employees, chairman and CEO Tom Horton said he expects the court process to take a few months, during which time the two airlines will continue to operate as independent companies and competitors.