DOJ explains airline merger intervention

The Department of Justice said this week that it attempted to block a proposed merger between US Airways and American Airlines because the companies have hubs at major airports with “access limitations.”

Critics accused the Justice Department of playing politics when it filed a lawsuit to block the proposed US Air-American merger because the agency has approved several other airline combinations in recent years.

{mosads}Assistant Attorney General William Baer said on a conference call after the Justice Department announced a settlement with the airlines to allow the merger to go forward that the difference was where US Air and American base their operations out of.

{mosads}”New York, Washington, Los Angeles, Chicago, Boston, Miami and Dallas are among the largest, most important business centers in the country,” Baer said. “But due to access limitations — such as slot and gate constraints — key airports in these cities are among the most difficult for an airline to enter and establish a meaningful presence.”

Aviation observers pointed from the minute the Justice Department filed its lawsuit to approvals in the last five years for Delta and Northwest, United and Continental, and Southwest and American Airlines.

The DOJ’s agreement with US Air and American requires the airlines to give up 54 flight pairs at Washington, D.C.’s Ronald Reagan National Airport, and 17 flight pairs at New York’s LaGuardia Airport, as well as gates at Chicago’s O’Hare International Airport, Los Angeles International Airport, and airports in Miami and Dallas.

Baer said the divestitures of the flights were “the largest ever in an airline merger and would allow low-cost carriers to fly more direct and connecting flights throughout the country each day. 

“This is a game changer,” Baer said. “As you know, we filed a lawsuit to block this merger out of concerns about the potential reduction in competition for air travel throughout the country. This settlement addresses those concerns and opens up the marketplace as never before. It will disrupt today’s cozy relationships among the incumbent legacy carriers and provide consumers with more choices and more competitive airfares.”