Thursday, August 15, 2013

Department of Justice Files Suit to Stop Airline Merger which Affects Both Passengers and Freight

American Airlines and US Airways Deal Halted on Non Competitive Grounds
Shipping News Feature

US – The Department of Justice filed a civil antitrust lawsuit on Tuesday challenging the proposed $11 billion merger between US Airways Group and the bankrupt American Airlines’ parent corporation, AMR Corp. Although largely a passenger story, the merger does affect the freight industry as we highlighted in our article earlier this year. The DOJ’s Antitrust Division, along with six state attorneys general, filed a lawsuit in the US District Court for the District of Columbia, which seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate. Assistant Attorney General for the Antitrust Division Bill Baer, said:

“We filed the lawsuit because we determined that the merger, which would create the world’s largest airline and leave just three legacy carriers [Delta, United and the new American/US company] remaining in the US, would substantially lessen competition for commercial air travel throughout the United States. Importantly, neither airline needs this merger to succeed. We simply cannot approve a merger that would result in US consumers paying higher fares, higher fees and receiving less service.

“Americans spent more than $70 billion flying around the country last year. Increases in the price of airline tickets, checked bags or flight change fees resulting from this merger would result in hundreds of millions of dollars of harm to American consumers.”

American and US Airways compete directly on more than a thousand routes where one or both offer connecting service, representing tens of billions of dollars in annual revenues. They engage in head-to-head competition with nonstop service on routes worth about $2 billion in annual route-wide revenues.