I said it during the Senate Aviation Subcommittee hearings on Capitol Hill and now the “new” America Airlines (AA) is proving me correct. The AA/US merger what’s-down-is-up and what’s-up is-down claim that cutting the number of network airlines from four to three would improve competition is now clearly seen as cynical bald-face misdirection. AA’s new line-up service from LaGuardia makes that clear as a bell.
Now that the bankruptcy judge has approved the merger of American Airlines and US Airways, the last hurdle is gone and shortly the two airlines will merge. Ned Levi examines who the winners and losers are as the merger is completed.
Just as when the Department of Justice (DOJ) filed its complaint against the America Airlines/US Airways merger, the announcement of a settlement surprised many in the aviation world. Lawyers, salivating at seeing an antitrust case go to trial, were disappointed and consumers looking at a dramatic cutback in airline competition on overlapping connecting routes felt thwarted. But, upon closer examination, the DOJ settlement may develop into a competitive benefit for consumers.
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The Justice Department has reached a settlement with American Airlines and US Airways regarding the merger of their airlines. The remedies extracted by the Department of Justice (DOJ) are stronger than any previously demanded of merging airlines and should help ameliorate the anticompetitive thrust of this merger. Unfortunately, consumers, competition and the free market —the entire reason for antitrust rules and regulations — took a hit.
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Previous merger cases are not comparable to this giant merger. To begin with, this is the biggest airline merger ever attempted and each of the prior mergers changed the aviation landscape.
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In an astounding letter, Democrats from Florida wrote to Florida Attorney General Pam Bondi asking her to withdraw support for the DOJ’s lawsuit against the merger of American Airlines and US Airways. Reps. Alcee Hastings, Debbie Wasserman Schultz, Ted Deutch, Frederica Wilson, Lois Frankel, Joe Garcia and Patrick Murphy all went on the record as siding with the airline and its employees and against consumers who will be faced with severe loss of competition.
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