American Airlines, US Airways Lobby Feds, EU On AntiTrust Issues

June 20, 2013
Leaders of American Airlines and US Airways continued to lobby federal officials Wednesday for their merger, while also asking for European Union antitrust approval.

June 20--Leaders of American Airlines and US Airways continued to lobby federal officials Wednesday for their merger, while also asking for European Union antitrust approval.

US Airways CEO Doug Parker and Gary Kennedy, chief counsel for American Airlines, answered questions before the U.S. Senate Aviation Operations, Safety and Security subcommittee. Both men faced accusations that the deal would harm consumers.

The proposed merger would reduce competition on 11.9 percent of U.S. air routes, a government review found, according to Bloomberg News coverage of the hearing.

The number of cities that would lose a carrier after the merger is 47 percent higher than in the 2010 combination that created United Continental Holdings Inc., Gerald Dillingham, who heads transportation issues at the U.S. Government Accountability Office, told the panel.

The new carrier will raise prices, decrease service and create labor unrest for its employees, Charles Leocha, director of the Washington, D.C.-based Consumer Travel Alliance, said at the hearing.

"There are no benefits overall," Leocha said. "It's time to stop this merger madness."

The subcommittee hearing came a day after two Senators, Democrat Amy Klobuchar of Minnesota and Republican Mike Lee of Utah, wrote a letter urging federal regulators to consider the merger's impacts on consumers, Bloomberg reported.

US Airways' Parker told the committee that the allegations by Leocha and others are "just plain wrong."

Lawmakers also questioned Parker and Kennedy about the combined airlines' dominance at Ronald Reagan National Airport in Washington, D.C. The merger could give the combined airline more than 70 percent of terminal slots at the highly competitive airport.

But Parker said forcing the airlines to give up terminal slots in popular airports such as Reagan National would only hurt service to medium and small airports throughout the country.

"Almost all of the 64 cities currently served by US Airways and not served by American are small- and medium-size communities," Parker said. "Many of these communities, over time, will be candidates for service to American's hubs."

Parker said if the new American Airlines is forced to give up slots at busy airports such as Reagan National, the airlines that win those bids would likely only expand their most lucrative routes to the biggest cities such as New York and Los Angeles.

Separately, American and US Airways notified the European Commission, the lawmaking body for the European Union, of the merger this week. The commission set July 23 as a provisional deadline for approval.

The two companies have been working with the U.S. Department of Justice since January on potential conditions for obtaining antitrust approval.

While both companies are based in the United States, the combined carrier will fly to 21 destinations in Europe, including nonstop flights from New York, Chicago, Dallas, Charlotte and Philadelphia.

US Airways has also committed to leave its Star Alliance for the One World Alliance, of which American Airlines is a founding member. Such alliances allow passengers to fly seamlessly between international destinations using partner airlines.

In addition to the EU, the merger needs approval from the judge in American Airlines' bankruptcy case in New York, US Airways shareholders as well as the Justice Department.

Bloomberg News, quoting people familiar with the matter, reported that U.S. antitrust approval would not come before American's Aug. 15 bankruptcy confirmation hearing.

Kyle Arnold 918-581-8380

[email protected]

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