Justice Dept. Seeks to Block Airline Merger, Says ‘American People Deserve Better’
Posted on Aug 13, 2013
Worried that the impending merger of American Airlines and US Airways would kill domestic competition, the Justice Department is suing on antitrust grounds.
“This transaction would result in consumers paying the price—in higher air fares, higher fees and fewer choices,” Attorney General Eric Holder said Tuesday.
European regulators approved the deal, but officials in the U.S. are troubled by the prospect of only three major domestic airlines. They dispute the claim that neither company can succeed independently, pointing to US Airways’ profits and American’s big-ticket purchases.
The department also cited American Airlines’ purchase two years ago of 460 new planes, said to be the largest such order in industry history.
If the merger continues, there will be only three major US airlines, which the justice department alleges “increasingly prefer tacit coordination over full-throated competition”.
In the last dozen years, the airline industry has had to contend with recession, the 9/11 flight ban, rising fuel costs and bad plane design. At the same time, consumers have been paying more and more for less, with previously complimentary services—like seats that can fit an adult human—now costing a premium.
—Posted by Peter Z. Scheer