Aug. 13, 2013 at 11:07 AM ET
The Justice Department and attorneys general from six states and Washington, D.C. have sued to block the proposed $11 billion merger between US Airways and Americans Airlines’ parent company, saying the merger would threaten "substantial harm to consumers."
Filing the suit in federal court in D.C., they say the merger would create the world’s largest airline and “would substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher air fares and receiving less service."
Attorney General Eric Holder said the transaction between US Air and AMR Corp. would result in “higher airfares, higher fees and fewer choices.”
Bill Baer, head of the Justice Department Antitrust Division, said in a statement the merger would end competition between US Airways and American, which could result in lesser service.
"Both airlines have stated they can succeed on a standalone basis, and consumers deserve the benefit of that continuing competitive dynamic," Baer said.
The lawsuit says that American and US Air compete directly on "thousands of heavily traveled nonstop and connecting routes." It says that with less competition, the airlines could cut services and raise prices without worrying about competition.
If approved, the four biggest U.S. airlines — American, United, Delta and Southwest — would be the products of mergers that began in 2008. Those deals have helped the industry control seats, push fares higher and return to profitability. But the Justice Department worries that a merger between American and US Air would mean four airlines would control more than 80 percent of the U.S. commercial air travel market.
Reagan National Airport in Arlington, Virginia, the facility closest to Washington, would see especially high concentration as the combined company would control 69 percent of the take-off and landing slots, the department said.
AMR Corp. has cut costs and debt since it filed for bankruptcy protection in late 2011. Pilots from both airlines have agreed on steps that should make it easier to combine their groups under a single labor contract, a big hurdle in many airline mergers.
In February, the companies disclosed their plans to create a company with 6,700 daily flights and annual revenue of roughly $40 billion.
The two airlines secured approval from the European Union on Aug. 5 after promising to surrender slots in Philadelphia and at London's Heathrow.
A spokesman for US Airways had no immediate comment. American Airlines did not immediately return a call from The Associated Press seeking comment.
The attorneys general were from Arizona, Florida, the District of Columbia, Pennsylvania, Tennessee, Texas and Virginia.
NBC's Pete Williams, Isolde Raftery, The Associated Press and Reuters contributed to this report.
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