Texas among states challenging US Airways-American Airlines merger

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by BYRON HARRIS

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WFAA

Posted on August 13, 2013 at 9:35 AM

Updated Tuesday, Aug 13 at 7:22 PM

In a surprise to airline observers and the airlines themselves, the Department of Justice, five states, and the District of Columbia have sued to stop the merger of American Airlines and US Airways.

In its challenge, the DOJ and Texas, Arizona, Virginia, Pennsylvania, Tennessee and the District of Columbia argue that the merger would cause hundreds of millions of dollars of harm to American consumers.

American Airlines says the merger is actually "procompetitve," and that blocking it "will deny customers access to a broader airline network that gives them more choices."

The Allied Pilots Association, which represents American's pilots, agrees.

"We think the DOJ is in error," said APA spokesman Tom Hoban. "It's a bit of a double standard when you've allowed United-Continental to merge and Delta-Northwest to merge, which have created two mega-carriers out there. We need this merger to do so."

In its lawsuit, the Justice Department cites past mergers in which breadth of service was reduced, the number of seats available to passengers was cut, and fares rose.

The Justice Department also cites a concentration of power at some airports that would result from the merger — most notably at Reagan National in Washington, where a combined American-US Airways would control nearly two-thirds of non-stop flights and well over half of the landing slots.

"There's no way a standalone American can compete with a United-Continental and a Delta-Northwest," Hoban said. "Their networks are twice our size, with twice the revenue. We cannot incrementally catch up to these carriers and complete with them."

The merger will now play out in two courts: Bankruptcy court later this week in New York, and a court in the District of Columbia where the antitrust case will be considered.

That process is expected to delay any merger by at least six to eight weeks.

E-mail bharris@wfaa.com

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