Justice Department Challenges American Airlines-US Airways Merger
If you are a frequent flyer with American Airlines or US Airways, hang on to your air miles.
In a surprise move, the Justice Department, along with the attorneys general of six states and the District of Columbia, filed a lawsuit on Tuesday seeking to block the proposed merger between the two airlines. The merger would create the world’s biggest airline.
The Justice Department said the merger would reduce competition, cut service and increase air fares.
This was unexpected because the Justice Department approved mergers between other carriers. Antitrust regulators had not challenged the mergers of Delta Air Lines with Northwest Airlines, United with Continental, and Southwest with AirTran.
In recent years, consumer groups and some economists have warned that the wave of consolidation in the airline sector had contributed to higher airfares and less choice for consumers.
The Justice Department says this merger would give four airlines the control of more than 80 percent of the United States market for commercial air travel.
American Airlines and US Airways intend to pursue their plan for merger.