Thus far, the District of Columbia along with Texas, Arizona, Florida, Pennsylvania, Tennessee and Virginia have all joined in the legal action. US Attorney General Eric Holder said in a statement that "by challenging this merger, the Department of Justice is saying that the American people deserve better." He added that "this transaction would result in consumers paying the price - in higher air fares, higher fees and fewer choices."
The complaint says customers would see a price rise as the merger would "substantially lessen competition" in the domestic market. According to the BBC, the lawsuit also cites direct competition between the airlines on nonstop routes worth about USD2billion in annual revenues with one example citing the newly merged company would take up 69% percent of flights out of Washington National and 63% of nonstop routes out of the airport.
The complaint also argues the two companies do not need to merge to continue to be competitive, and that American Airlines is likely to exit bankruptcy as a "vigorous competitor" citing its purchase two years ago of 460 new planes, said to be the largest such order in industry history.
The DoJ further claims that if the merger continues, there will be only three major US airlines (the others being Delta Air Lines and United Airlines which, it alleges, "increasingly prefer tacit coordination over full-throated competition".
US Airways boss Doug Parker said the company would fight the injunction while both carriers noted that in light of the DoJ's action they no longer expected the merger to close by the end of 2013, but that they remained "hopeful" litigation would be over by year's end.
Source: CH-Aviation
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