US Airways and American Airlines Merger

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The American Airlines and US Airways merger to form the new American Airlines was first announced on February 14, 2013. Talks of this merger, which would form the largest airline in the United States, came on the heals of American Airlines pulling itself out of bankruptcy. The original plan called for completion of the merger by September 2013, but challenges and inquiries into the merger by state and federal agents delayed that plan. A group of as many as 19 state attorney generals and the US Department of Justice (DOJ) conducted investigations into the merger over concerns it would negatively affect jobs and regional economies. The merger also raised concerns over route coverage and the impact it would have on intra-continental travel and rate competition.

The Government Accountability Office (GAO) released [PDF] a report in June 2013 confirming some of these fears. The report stated that the newly formed carrier would be the only provider of nonstop service on seven of the twelve routes where the two airlines currently compete.
Following this report, the DOJ and the attorney generals from six states and the District of Columbia, brought an antitrust lawsuit challenging the merger on August 13, 2013. The challenge raised many of the previous concerns and highlighted the potential for higher prices due to market control and lowered competition. The majority market control by the proposed airline was considered a prima facie violation of antitrust law, and thus warranted judicial analysis. States involved included those most likely to be impacted by the merger, such as Arizona, the home of US Airways, and Texas, the home of American Airlines. A settlement was reached on November 12, 2013. This settlement requires the new airline to reduce flights out of certain airports, including Washington's Reagan Airport and New York's LaGuardia Airport, in an effort to nurture competition and dilute market control.

Justice Ruth Bader Ginsburg of the US Supreme Court denied an application to stay the merger on December 7, 2013. The complaint ruled on by Justice Ginsburg alleged, amongst other things, concern over 90 percent of all air routes in the United States being operated by the Big 4 airlines. On December 9, 2013, the merger was implemented, officially creating New American Airlines, the nation's largest airline with control over 57 percent of the nation's flights.

 

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