American Airlines and US Airways fired back at the U.S. Justice Department in a new court filing, saying federal antitrust regulators fail to understand the current realities of industry and competition.
“The plaintiffs (Justice Department) seem to be nostalgic for certain elements of this history that seem to provide consumer benefits, while ignoring or downplaying other elements that do not fit their preferred narrative,” a filing from American parent AMR Corp. reads.
The filings are American’s and US Airways’ first legal response to the lawsuit filed on Aug. 13 seeking to block the merger. The lawsuit has already delay American’s bankruptcy suit and put on hold the merger between the two airlines, which was expected to already be completed.
The Justice Department wants to shut down the merger entirely, claiming that three years of airline consolidation has shrunk competition too much. They say that the merger would significantly increase fares on more than 1,000 routes in essentially every market served by the two airlines.
“It is ironic that plaintiffs fixate on maintaining the number of “legacy” carriers—those airlines that, prior to 1978, endured the well-documented failure of federal regulation of routes and fares — because those carriers are by most relevant measures the least financially successful companies in the industry,” read the response from US Airways.
The airlines continued to claim that the merger of the country’s fourth and fifth largest airlines is necessary to compete with legacy giants United and Delta, which have both grown through consolidations.
The filing from US Airways and American Airlines attempts to pick apart the Justice Department’s case piece by piece, including federal claims that U.S. Airways would eliminate its Advantage Fares program, which gives flyers a discount for choosing non-direct routes.
But mostly the airlines hang their argument on their current position as smaller competitors to United and Delta, saying that a larger airline is needed to effectively compete.
“This transaction would create a third comprehensive, global network carrier (the “New American”), fully capable of competing with the two that exist today…,” the AMR Corp. response reads.
Late Tuesday Wall Street Journal reported that US Airways will ask its board to extend a Dec. 13 deadline. The terms of the merger allowed either airline to terminate the deal if the two airlines hadn’t combined by Dec. 13, 2013.
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