[Travelandtourism] update: DOJ MOVE TO BLOCK AA-US MERGER STUNS INDUSTRY

[Margo Downey and Arrow]

Cheryl, I think I've gotten this from you many times.

Margo and Arrow

-----Original Message-----
From: Travelandtourism [mailto:travelandtourism-bounces at nfbnet.org] On
Behalf Of cheryl echevarria
Sent: Wednesday, August 14, 2013 1:08 PM
To: travelandtourism
Subject: [Travelandtourism] update: DOJ MOVE TO BLOCK AA-US MERGER STUNS
INDUSTRY

If you get this again, I do apologize.
My hotmail has been out, MSN is trying to fix. So sorry if comes through
twice.
DOJ MOVE TO BLOCK AA-US MERGER STUNS INDUSTRYby Michèle McDonaldAugust 14,
2013

In a move that stunned the travel industry, the U.S. Department of Justice
filed a lawsuit this week to block the proposed merger of American Airlines
and US Airways, saying it violated antitrust laws.
Perhaps the most surprising aspect of the lawsuit is its “air of finality,”
with no suggestion that concessions would change the DOJ’s view, said
aviation consultant Robert W. Mann.
Assistant Attorney General Bill Baer flatly stated that “[w]e simply cannot
approve a merger that would result in U.S. consumers paying higher fares,
higher fees and receiving less service.”
The lawsuit, in which the attorneys general of six states and the District
of Columbia joined as plaintiffs, came eight days after the European
Commission approved the merger. 
It also came two days before a hearing at which American’s bankruptcy court
was expected to confirm its reorganization plan, which involves the merger,
and release it from bankruptcy.
The Allied Pilots Association told its members that American Airlines’ plan
of reorganization includes an automatic 30-day stay, which the DOJ’s
announcement has triggered. As a result, the airline will exit Chapter 11
restructuring no sooner than the fourth quarter of this year.
‘Vigorous’ defense plannedAmerican and US Airways vowed to “mount a vigorous
and strong defense” of their planned merger.
“We believe that the DOJ is wrong in its assessment of our merger,” the
airlines said in a joint statement.
“Integrating the complementary networks of American and US Airways to
benefit passengers is the motivation for bringing these airlines together.
Blocking this pro-competitive merger will deny customers access to a broader
airline network that gives them more choices.”
DOJ objectionsMann commented that the lawsuit “reads like an indictment for
doing what every other fragmented industry has done: They consolidated.” 
Among the objections to the proposed merger raised by the DOJ and the
attorney general are:
•    It would reduce the number of major domestic airlines from five to four
and the number of “legacy” airlines from four to three. “Because of the size
of the airline industry, if this merger were approved, even a small increase
in the price of airline tickets, checked bags, or flight change fees would
cause hundreds of millions of dollars of harm to American consumers”
annually.
•    US Airways’ Advantage Fares, which offer lower prices on connecting
services to compete with other carriers’ nonstop services, would likely
disappear.
•    American’s original standalone plan for emerging from bankruptcy
involved growth, whereas US Airways’ management, which would assume the
management of the merged carrier, favor the capacity discipline practiced by
other major carriers, notably Delta.

•    US Airways currently holds 55% of the slots at Washington National
Airport. The merger would increase that percentage to 69%. The combined
airline would have a monopoly on 63% of the nonstops departing the airport.
Mann noted that the United-Continental merger left that combined airline
with 90% of the slots at Newark, although Newark, unlike National Airport,
is not a slot-controlled airport. “I don’t see where this follows precedent
or is rational,” he said.
Suit cites Kirby’s statementsThe language of the lawsuit suggests that the
plaintiffs take particular issue with statements made by US Airways
president Scott Kirby.
The lawsuit says of Kirby that “[h]e boasted at a 2012 industry conference:
‘Consolidation has also 
 allowed the industry to do things like ancillary
revenues [e.g., checked bag and ticket change fees]. That is a structural
permanent change to the industry and one that’s impossible to overstate the
benefit from it.’” 
The lawsuit goes on to say: “In essence, industry consolidation has left
fewer, more-similar airlines, making it easier for the remaining airlines to
raise prices, impose new or higher baggage and other ancillary fees, and
reduce capacity and service. This merger positions US Airways’ management to
continue the trend – at the expense of consumers.”
Crandall: ‘dumbest thing I’ve ever seen’Former American chief Robert
Crandall said he was furious at “the stupidity of the U.S. government,”
which he said was “determined to create ever-greater monopolies.”
Rather than promoting competition, the lawsuit does just the opposite by
“not allowing the creation of a third competitor,” he said. “It’s the
dumbest thing I’ve ever seen.”
The government made mistakes when they allowed the Delta-Northwest and
United-Continental mergers, Crandall said, and “now all of sudden we’ve
allowed too many mergers.”
“I don’t understand crippling these companies,” he said. “This is nuts.
Absolutely nuts. If there were any justice in the world, American-US Airways
would pass in a flash.”
The last time the DOJ blocked an airline merger was in 2001, when it raised
objections to a United-US Airways tie-up.

Disabled Entrepreneur of the Year 2012 of NY StateLeading the Way in
Independent Travel!
Cheryl Echevarria,
Ownerhttp://www.echevarriatravel.com631-456-5394reservations@echevarriatrave
l.comhttp://www.echevarriatravel.wordpress.com
Affiliated as an independent contractor with Montrose TravelCST -
#1018299-10 FL CST T156780Your old car keys can be the keys to literacy for
a blind child.  Donate your unwanted vehicle to us by clicking
https://nfb.org/vehicledonations or call 855-659-9314.Echevarria Travel has
partnered with Braille Smith. http://www.braillesmith.com for all her
braille needs.Gail Smith is the Secretary of the NFB of Alabama

_______________________________________________
Travelandtourism mailing list
Travelandtourism at nfbnet.org
http://nfbnet.org/mailman/listinfo/travelandtourism_nfbnet.org
To unsubscribe, change your list options or get your account info for
Travelandtourism:
http://nfbnet.org/mailman/options/travelandtourism_nfbnet.org/margo.downey%4
0verizon.net