Justice Department sues to stop US Airways merger w/ American Airlines

The U.S. Justice Department Tuesday said it had filed a legal challenge to stop the merger of US Airways and American Airlines. The merger would result in higher costs and poorer service for consumers, the department said in a statement. It would create the world's largest airline but at a cost to consumers, said the Justice Department, which filed a lawsuit along with six state attorneys general and the District of Columbia. The deal was negotiated while airlines were struggling to survive the recession and its aftermath, which reduced travel and pushed airlines to seek out partners and create a plethora of fees for everything from services to snacks to extra legroom. The Justice Department said the merger "would substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service." "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," Attorney General Eric Holder said. "If this merger goes forward, even a small increase in the price of airline tickets, checked bags or flight change fees would result in hundreds of millions of dollars of harm to American consumers." "Both airlines have stated they can succeed on a standalone basis and consumers deserve the benefit of that continuing competitive dynamic," said Assistant Attorney General Bill Baer at the department's anti-trust division. The government said AA and US Airways "engage in head-to-head competition with non-stop service on routes worth about $2 billion in annual route-wide revenues." Above and beyond the merger, the department said the deal would put 80 percent of the U.S. air travel market in the hands of four companies. US Airways and AA together would control 69 percent of the flights in and out of the nation's capital, the department said.