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MailTribune.com
  • Deal set on US Airways-American merger

    Airline's concessions will open door for low-cost carriers to compete nationwide
  • WASHINGTON — The Justice Department announced Tuesday that it has cleared the $11 billion merger of American Airlines and US Airways to form the world's largest airline, but it did so only after both agreed to surrender enough slots for discount carriers to operate dozens more flights at seven major airports.
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  • WASHINGTON — The Justice Department announced Tuesday that it has cleared the $11 billion merger of American Airlines and US Airways to form the world's largest airline, but it did so only after both agreed to surrender enough slots for discount carriers to operate dozens more flights at seven major airports.
    Attorney General Eric Holder and his antitrust chief touted the settlement as possibly game-changing after a sweeping round of consolidation that concentrated control of the nation's commercial airline industry.
    Under the agreement, detailed in a proposed settlement that still requires the approval of a federal judge in Washington, the airlines must divest gates and slots to low-cost carriers at airports in Boston, Chicago, Dallas, Los Angeles, Miami, New York and, most of all, at Reagan National Airport outside the nation's capital.
    The new airline would divest slots for 52 roundtrip flights by low-cost carriers at Reagan. American and US Airways would operate 44 fewer flights from that airport than their current joint total of 290. New York's LaGuardia Airport could host 17 more daily flights by discount carriers.
    As part of the agreement, the airlines will maintain a hub at Charlotte Douglas International Airport in North Carolina for at least three years. They also will maintain their hubs in New York at John F. Kennedy International Airport, in Los Angeles, Miami, Phoenix, Philadelphia and at Chicago O'Hare International Airport for the same length of time.
    Striking a deal with the Justice Department was expected to be the final hurdle for the US Airways-American merger. Shareholders have approved the deal, and a federal bankruptcy court judge overseeing American's Chapter 11 case earlier signed off on the plan.
    The settlement is likely to climax a tumultuous period in which several of the nation's biggest airlines, beset by overcapacity and soaring jet fuel prices, filed for Chapter 11 bankruptcy protection. Assuming the latest deal is approved, six of the largest airlines will have since merged to create three mega carriers — the new American, Delta and United.
    Despite that concentration of pricing power, Holder said in a statement that the settlement "has the potential to shift the landscape of the airline industry."
    "By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country," he said.
    Bill Baer, chief of the department's Antitrust Division, called the settlement "groundbreaking" and predicted that it would "dramatically enhance the ability of (discount carriers) to compete systemwide."
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