DOJ to Drop Antitrust Case If US Airways, American Give Slots to Low-Cost Carriers

DOJ to Drop Antitrust Case If US Airways, American Give Slots to Low-Cost Carriers

 WASHINGTON, D.C. — (Mealey’s) The U.S. Department of Justice (DOJ) on Nov. 12 proposed a final judgment with US Airways Group Inc. and American Airlines Inc. under which the DOJ would drop its merger antitrust lawsuit against the airlines if they divest slots and gates at key constrained airports across the country to low-cost carrier airlines (United States of America v. US Airways Group Inc., et al., No. 13-01236, D. D.C.).

Antitrust Lawsuit

The DOJ sued the airlines in the U.S. District Court for the District of Columbia on Aug. 13, contending that the merger of US Airways and American Airlines violated federal antitrust laws.

The proposed merger had been part of the Chapter 11 reorganization plan filed by American Airlines’ parent company, AMR Corp., which filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York in 2011.

The DOJ proposes that the airlines divest the slots and gates in question to “enhance system-wide competition in the airline industry resulting in more choices and more competitive airfares for consumers.”

Concession Proposed

The proposed concessions will increase the presence of low-cost carriers at Boston Logan International, Chicago O’Hare International, Dallas Love Field, Los Angeles International, Miami International, New York LaGuardia International and Ronald Reagan Washington National, the DOJ maintains.

Consequently, the low-cost carriers will have the incentive and ability “to invest in new capacity,” which will permit them to compete more extensively nationwide, the DOJ says.

The settlement requires US Airways and American Airlines to divest slots, gates and ground facilities at key airports around the country, the DOJ says.

Divestiture

The divestiture would include: 104 air carrier slots at Reagan National and rights and interest in other facilities at the airport necessary to support the use of the slots, 34 slots at LaGuardia and rights and interest in other facilities at the airport necessary to support the use of the slots and rights and interests to two airport gates and associated ground facilities at each of Boston Logan, Chicago O’Hare, Dallas Love Field, Los Angeles International and Miami International.

The settlement would involve US Airways and American Airlines selling slots at Reagan National and LaGuardia under procedures approved by the DOJ.

Moreover, JetBlue Airways at Reagan National and Southwest at LaGuardia would be given the opportunity to acquire the slots they currently lease from American. 

The proposed settlement would allow the DOJ to appoint a monitoring trustee to oversee the divestitures or transfers of the slots and gates, and it would prohibit the merged company of US Airways and American Airlines from reacquiring an ownership interest in the divested slots or gates during the term of the settlement. 

Counsel

The DOJ is represented by Assistant Attorney General William Bauer; Deputy Assistant Attorney General Renata B. Hesse; Director of Civil Enforcement Patricia A. Brink; Director of Litigation Mark W. Ryan; Chief of the Transportation, Energy and Agriculture Division William Stallings; Assistant Chief of the Transportation, Energy and Agriculture Division Kathleen S. O'Neill; Ryan J. Danks of the Antitrust Division; and Michael D. Billiel, Katherine A. Celeste, J. Richard Doidge, Tracy J. Fisher, David Z. Gringer, Amanda D. Klovers, Caroline E. Laise, John M. Lynch, William M. Martin, Joseph Chandra Mazumdar and Robert D. Young of the DOJ.  All are in Washington. 

American Airlines is represented by John M. Majoras, Paula W. Render, Michael S. Fried and Rosanna K. McCalips of Jones Day and Mary Jean Moltenbrey of Paul Hastings.  US Airways is represented by Richard Parker of O'Melveny & Myers.  All are in Washington. 

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