World's largest airline merger halted by U.S.

If the American Airlines and U.S. Airways it would be the world's largest airline. But that's now uncertain.
Written by Tyler Falk, Contributor on

After the European Union gave its approval earlier this month for American Airlines and U.S. Airways to merge into the world's largest airline, those plans have suddenly, surprisingly come to a halt.

The United States Department of Justice announced that it has filed a civil antitrust lawsuit that could prevent the two companies from merging.

"This transaction would result in consumers paying the price – in higher airfares, higher fees and fewer choices," said U.S. Attorney General Eric Holder, in a statement. "Today’s action proves our determination to fight for the best interests of consumers by ensuring robust competition in the marketplace.”

In its reasoning for filing the lawsuit, the Justice Department says the airline industry is already too consolidated. If the merger went through it would mean four airlines would control more than 80 percent of the commercial U.S. air travel market.

While some argue that the merger "is probably the best possible outcome for consumers" and that consolidation of airlines is actually a good thing, Justice Department isn't convinced with both American Airlines and U.S. Airways seeing record profits last quarter.

But that doesn't mean the merger is dead, however, as Brad Plumer explains at The Washington Post:

It’s also possible, however, that the lawsuit is just a tactic to elicit more concessions from the two airlines in order to alleviate antitrust concerns. Back in 2010, the Justice Department eventually approved the merger between United and Continental after the airlines agreed to relinquish 36 take-off and landing slots at Newark Liberty International Airport to Southwest Airlines.

Especially with the E.U.'s endorsement in hand, don't expect the potential world's largest airline to go away without a fight.

Read more: U.S. DOJ, The Washington Post

Photo: Flickr/My16SidedOffice

This post was originally published on Smartplanet.com

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