American Airlines and US Airways have slammed the U.S. Justice Department’s (DOJ) arguments in their replies to the department’s efforts to block their proposed merger.
In responses filed to the U.S. District Court in Washington late on Sept. 10, the two carriers systematically refute the allegations made by the DOJ in its lawsuit. They also went a step further by heavily criticizing – at times almost ridiculing – the DOJ’s rationale for opposing the merger.
American says the DOJ, in its lawsuit, “tries to explain” why the merger would be anti-competitive, “but can only do so by ignoring the realities of the airline industry in the 21st Century. This transaction, viewed through the lens of the actual U.S. airline industry today, rather than some idealized vision of the past, does not violate the antitrust laws.”
“The [DOJ] complaint presents no coherent rationale supporting its challenge to the merger,” says American. “Rather, it cobbles together a collection of ad hoc contentions based on anecdotes involving small numbers of passengers and historical e-mails and other documents irrelevant to this transaction, while ignoring the central facts and economic realities of today’s airline industry.”
The two airlines repeated their contention that the merger will make them “more effective long-term competitors” in the current U.S. airline environment, and will allow them to form a more viable airline that is more capable of sustaining economic shocks.
One of the main arguments of American and US Airways is that the DOJ is not being consistent with earlier decisions regarding airline mergers. In defending the consumer benefits claimed by the airlines, American stresses that “the DOJ itself has repeatedly recognized them while approving recent industry mergers based on the same analytical approach.”
The formula for network overlap used by DOJ in this particular case would have resulted in comparable findings for other recent airline mergers that were “nonetheless approved and lauded by the DOJ,” American says.
American argues that the U.S. airline industry is “intensely competitive today and would remain so after this transaction.” Air travelers “receive more service to more places at lower prices (properly adjusted for inflation and other relevant factors) than ever before,” American says. The DOJ complaint “ignores this reality, and instead concocts an imaginary narrative where airlines tacitly collude and where prices are higher than in the past, but the real facts are just the opposite.”
DOJ officials assert that the degree of competitive overlap on more than 1,000 domestic city pairs prompted the department to seek a full dismissal of the merger agreement, rather than proposing carve-outs. The DOJ also says that recent airline profits prove that the airlines will still be viable absent the merger.