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Antitrust and airlines: Brace, brace

August 16, 2013 at 3:24 am | News Desk

Will it fly?

FLYING conditions were perfect, it was widely agreed, when American Airlines and US Airways announced in February their intention to take off together. But on August 13th the airlines unexpectedly found themselves fighting severe headwinds as the Department of Justice and six state attorneys-general filed a lawsuit to ground the proposed merger for being anti-competitive. The trustbusters argued that this was a bad deal for passengers who would face “higher air fares, higher fees and fewer choices”.The new airline, to be called American Airlines Group, would be the world’s biggest, with around 187m passengers a year and more than 100,000 workers. After decades of consolidation, this would leave over 80% of America’s domestic air-travel market in the hands of only four airlines: the new one plus Delta, United and Southwest. Nor would the concentration of the industry be certain to stop. There is speculation that one reason the trustbusters decided to fight this deal is that they suspect that the new airline is planning a further merger with United. Their action may also indicate that the Obama administration intends to…

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The Economist: Business

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