Aug. 13, 2013
Washington, DC — The U.S. Department of Justice filed an antitrust lawsuit today to block a proposed merger between American Airlines and US Airways, which would create the world’s largest airline. The suit argues the $11 billion transaction would reduce competition in an already highly concentrated market, costing consumers hundreds of millions of dollars per year.
The New America Foundation's Markets, Enterprise, and Resiliency Initiative last year published a report, Hard Landing, examining how the U.S. air transport system was failing to serve citizens across much of the country. The report details how consolidating airlines have slashed service in major cities like St. Louis, Memphis, Cincinnati, and Pittsburgh, disrupting business activity and threatening economic vitality. The research shows the trend will worsen as airlines continue to consolidate capacity and abandon heartland cities for major domestic and international routes. MERI also published an article on the subject, "Terminal Sickness," in the Washington Monthly, and organized an event to discuss causes, effects, and potential fixes.
Barry C. Lynn and Lina Khan of the Markets, Enterprise, and Resiliency Initiative are available to give reporters context for the Justice Department lawsuit filed today and the U.S. airline industry in general. In response to today's news, Lynn released the following statement:
"The Markets, Enterprise, and Resiliency Initiative at the New America Foundation applauds today’s decision by the Justice Department to oppose the proposed merger between American Airlines and US Airways. As we made clear in our work, we believe the U.S. airline industry was far too concentrated - and dysfunctional - even before this latest deal was proposed.
As we detailed in our article and report, we strongly believe that antitrust law alone is not sufficient for ensuring equitable service to all communities in America, and that some form of more formal regulation is required. But we do hope today’s action is the first step in restoring the high standards of service - combined with real competition - that characterized the American airline industry into the 1990s.”