US Air, American Antitrust Settlement Talks Focus On Broad Concessions

By Paul Riegler on 3 November 2013
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An American Airlines aircraft in Chicago

An American Airlines aircraft in Chicago

Any settlement that would settle the U.S. government’s challenge to the merger of American Airlines and US Airways would include divestitures at key airports throughout the U.S., according to a source familiar with the matter.

While the two airlines were reported to be preparing a settlement offer that would include giving up some slots at Ronal Reagan National Airport in Washington, D.C. in exchange for getting the Department of Justice to drop its suit that seeks to block the merger that would create the world’s largest airline by passenger traffic on Wednesday, the new report indicates that talks between the two sides are well under way and that the government is seeking broad and substantial concessions.

The head of the DOJ’s antitrust unit, Bill Baer, has previously indicated that the government would listen to settlement proposals while stating that the “right solution” was to prevent the merger from taking place.  The talks indicate that the department’s position may be less rigid than originally believed.

The DOJ is arguing that the combination would harm consumers by reducing service and increasing fares.  It cited over 1,000 routes where it believes that the merger, were it to take place, would harm competition.  A merger of US Airways and American would leave four airlines in control of 80% of the domestic market.

The news that Department of Justice officials were seeking a more extensive divestiture from the two airlines was first reported by the Wall Street Journal on Sunday.

The DOJ filed to block the combination in August.  The case is set to go to trial on November 25, and U.S. District Judge Colleen Kollar-Kotelly, the trial judge, has said she intends to issue a ruling by January 10.

A divestiture of slots and a reduction of presence at key airports throughout the United States would help ensure that the merger wouldn’t limit competition on routes to these cities or cause fare prices to rise.

(Photo: Accura Media Group)

Accura News

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