US Government seeks to block merger
The US Government is seeking to block the proposed merger between American Airlines and US Airways, arguing it will cause “substantial harm” to consumers through higher fares and fees.
In a lawsuit lodged in the federal court in Washington, the Justice Department said the public will lose “head to head competition” between the carriers on thousands of routes across the country.
“They will pay more for less service because the three remaining legacy carriers, United, Delta and the new American, will have very little incentive to compete on price,” assistant attorney general Bill Baer said. “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.”
The US$11 billion merger, announced in February, would create the world’s largest airline in terms of passenger miles.
Between the major carriers and Southwest, four airlines would control 80% of the US market.
The airlines said they would fight the legal action.
In a letter, AA chief executive Tom Horton said the carriers had tried to convince authorities that the deal would not harm competition.
“Since the DoJ has formed a contrary view, the matter will now be settled by the courts,” he said.
In a statement, the airlines said: “We will mount a vigorous defense and pursue all legal options in order to achieve this merger and deliver the benefits of the new American to our customers and communities as soon as possible.
“We believe that the DoJ is wrong in its assessment of our merger.”
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