The US Department of Justice has filed a "civil antitrust lawsuit" challenging the planned merger of US Airways and American Airlines.
The union of the two companies would create the world's largest airline, but the justice department believe the $11 billion merger would "substantially lessen competition for commercial air travel".
The challenges have been put forward by the Department of Justice, attorneys general for six states and the District of Columbia, who all claim the merger would cause passengers to have to pay higher airfares and receive poorer service.
Attorney general Eric Holder said: "Airline travel is vital to millions of American consumers who fly regularly for either business or pleasure.
"By challenging this merger, the Department of Justice is saying that the American people deserve better. This transaction would result in consumers paying the price - in higher airfares, higher fees and fewer choices."
He said the challenge showed determination to fight for "robust competition in the marketplace".
US Airways agreed to buy American Airlines parent AMR in February. AMR filed for bankruptcy in November 2011, and it was expected to emerge from bankruptcy once the merger was ready to close. The two carriers hope to complete the deal in the third quarter of the year.
The merger would result in four airlines controlling more than 80% of the US commercial air travel market.
Earlier this month the European Commission in Brussels gave the merger the green light, while judge Sean Lane who is in charge of AMR's bankruptcy also gave his approval earlier this year. Lane called the merger "an excellent result".
The Business Travel Coalition previously called for potential anti-competitive issues to be investigated by writing to the US government to raise concerns over growing airline consolidation.
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