Pennsylvania Joins Lawsuit Against Merger of US Airways and American Airlines

The U.S. Justice Department has filed a civil anti-trust lawsuit to prevent the proposed $11 billion merger of US Airways and American Airlines.

Pennsylvania Attorney General Kathleen Kane has joined the lawsuit, along with attorneys general of the District of Columbia and five other states, citing concerns about service reductions and increased fares.

The merger would leave the U.S. with just four major airlines, compared to the nine the country had as recently as 2005.

According to the complaint, the merged airline would also be the largest in the world and would put 80 percent of the United States commercial air travel market in the hands of four airlines.

Before 2008, Kane said there were six major airlines competing vigorously and then came the mergers.

The airlines always promised more flights, lower fares and better service, she said, but the promised consumer benefits never materialized. Instead, the airlines have followed each other in raising ticket prices, imposing new baggage fees and reducing service. 

"This merger would not be good for consumers," said Kane said in a statement. "Competition would be reduced, and the cost of flying would go up. We know this from past experience, and we know it from our economist's analysis."

"US Airways has repeatedly asked for public dollars in exchange for expanded service, but it has often failed to deliver on its promises."

US Airways asked Allegheny County to build it a new terminal at the Pittsburgh International Airport, promising that Pittsburgh would be the airline's long-term hub. The airline then abandoned the $500 million hub after its merger with America West in 2005. Other airlines, and ultimately the consumer, were left to pay the bill.

US Airways also walked away from its commitments in Philadelphia, Kane said.

In Pennsylvania, the merger would adversely affect not only Pittsburgh and Philadelphia, but also any city served by the two airlines, such as Harrisburg. The attorney general's office estimates at least 1 million Pennsylvania travelers will be negatively impacted and the cost of flying increased.

Concerns over increased fares, ancillary fees and other costs is a driving factor behind the DOJ's complaint. Others joining this lawsuit--D.C., Virginia, Florida, Texas and Arizona--have US Airways or American hubs.

“The merger of these two important competitors will just make things worse –exacerbating current airline industry trends toward reduced service, increasing fares and increasing passenger fees,” explained Bill Baer, assistant attorney general in charge of the Department of Justice’s Antitrust Division.

US Airways CEO Doug Parker told employees in May that the Moon Township-based flight operations center—built with the help of $16.25 million in public subsidies and opened in November 2008—could close as a result of the American Airlines merger, according to a transcript filed with the Securities and Exchange Commission.

Parker, responding to a question, said the airlines won't need two centers once they consolidate.

Congressman Tim Murphy, R-Upper St. Clair sent a letter to Parker in April with Rep. Mike Doyle (PA-4) expressing “serious concerns" the merger would have on the region, both in terms of job loss and decreased frequency of flights.

Murphy's district includes Pittsburgh International Airport, the US Airways flight-operations center, and the US Airways heavy aircraft maintenance hangar.

In response to the lawsuit filed this week, Murphy released a statement calling for additional scrutiny to protect consumers, workers and taxpayers.

“I’ve been troubled by the merger since day one and have expressed my concerns that this proposal would result in significant job losses for thousands of Southwestern Pennsylvanians and stiff the region’s taxpayers, who funded the buildout of the Pittsburgh International Airport based upon unfulfilled promises from US Airways of growth in the region."

Read the PA Attorney General's "frequently asked questions" here.

Read the full release from the Justice Department here. 

What do you think about the proposed merger? Tell us in the comments section below.