Following a conversation over a year in length, the US Airways Group Inc. and AMR Corp. merger originally proposed in Feb 2013 has been approved. U.S. District Judge Colleen Kollar-Kotelly of Washington okayed a Department of Justice (DOJ) settlement that will allow the deal to go through with a series of stipulations set by the department.
“Together, American Airlines and US Airways have created a strong global competitor that provides better access to more destinations than we could ever provide independently,” the newly combined American Airlines Group Inc. said in a statement.
Under the settlement terms, the merged airline would lose space in a number of high-volume airports through a DOJ supervised sell-off. The slots will be made available to low-cost carriers rather than other large scale airlines like Delta Airlines Inc. and Jet Blue Airways Corp. Reducing US Airways Group Inc. presence and allowing other airlines to fill vacated terminals is intended to prevent the newly merged company from owning too large a percentage of available flights in those locations.
The settlement ends a suit blocking the $11 billion merger that was filed by the DOJ in August of 2013. The complaint claimed, among other things, that “This merger—by creating the world’s largest airline— would, in the words of US Airways’ management, ‘finish industry evolution.’ It would reduce the number of major domestic airlines from five to four, and the number of ‘legacy’ airlines—today, Delta, United, American, and US Airways—from four to three. In so doing, it threatens substantial harm to consumers.”
Consumer advocates are concerned that the settlement terms do not go far enough in preventing the airline from grabbing the lions-share of the market, giving them leverage to increase flight prices. Delta also aired concerns that larger operators would be passed over with the option to expand into the vacated slots.
“We’re pleased that the court agreed that the department’s remedy will enhance system-wide competition in the airline industry,” said the DOJ’s antitrust chief, Bill Baer.
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