Justice Department Approves Giant Airline Merger

Doug Parker CEO of US Airways
Doug Parker CEO of US Airways

A new mega-airline company will be created when American Airlines and US Airways take advantage of the Department of Justice’s decision to allow the two companies to merge, making them the world’s most expansive airline.

Last August the US government tried to prevent the merger, claiming competition would be restricted, causing ticket prices to rise on hundreds of routes around the country.
The airlines counter that this deal actually will increase competition now that there is a real competitor to United Airlines and Delta Air Lines, two companies which recently grew after their own mergers.

Tuesday’s settlement with the Justice Department still requires the approval of a federal judge in Washington, DC. One requirement of the agreement is that American and US Airways will need to give up their take-off and landing rights at Reagan National in DC and La Guardia Airport in New York. They will also need to give up some of their gates at airports in Boston, Chicago, Los Angeles, Dallas and Miami, allowing low-cost carriers to have them. This move is to offset the impact of the merger on smaller airlines, increasing competition.

Eric Holder, the attorney general, said that the agreement would increase competition on nonstop and connection flights all over the country. The Justice Department said that the relinquishing of gates and routes at the country’s major airports by the newly merged entity was a “groundbreaking” move.

US Airways Chief Executive Doug Parker, who will head the newly merged company said,

“This is very good news and we are grateful to all who have made it happen.”

He added his thanks to politicians and business leaders who supported US Airways and helped push for the merger. The companies are expected to complete the move to merger in December.

About Peter Jefferson

Peter Jefferson is a full-time researcher for www.businessdistrict.com, a task he took on in 2011 when the site was launched. He brings to the position a wealth of practical experience in the field of fiscal policy, having consulted with various government bodies on revenue collection, expenditure and economic growth. Contact Peter at peter[at]businessdistrict.com