US-American merger ‘to benefit consumers by $500m’

US-American merger ‘to benefit consumers by $500m’

US Airways has defended its proposed merger with American Airlines after the US Justice Department filed a lawsuit to stop the deal.

The airline said the deal would create $500 million in savings to consumers annually by creating a stronger competitor to Delta Air Lines and United Continental, Reuters reports.

Their claims come after the government argued the merger would violate antitrust laws because it would lead to higher airfares and related fees.

The union of the two companies would create the world’s largest airline, but the justice department believes the merger – worth around $11 billion – would “substantially lessen competition for commercial air travel”.

US Airways argues that the deal is lawful and should be allowed to go ahead.

In a file prepared by the airline, it said: “Conservative estimates place the net benefits to consumers at more than $500 million annually.”

Reuters said US Airways had accused the Justice Department of ignoring the rise of small, aggressive low-cost carriers such as JetBlue Airways and Spirit Airlines.

The airline claims the low-cost airlines, along with Southwest Airlines and other regional airlines, now carry 40% of US air traffic.

US Airways added: “The demonstrable success of low-cost carriers is a market-driven response to consumer demand, but the (Justice Department) complaint inexplicably ignores their profound and permanent effect on industry competition.”

A judge is set to hear the case without a jury in November to establish whether the merger should proceed.

American Airlines said: “The transaction, viewed through the lens of the actual US airlines industry today, rather than some idealised vision of the past, does not violate the antitrust laws.

“The airline industry is intensely competitive today and would remain so after this transaction”

Last month, 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.”


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