US Airways and American Airlines Merger to Result in World’s Largest Carrier
In what could possibly result in the world’s largest airline carrier, American Airlines and U.S. Airways are seeking approval to merge. Currently, American Airlines is the third largest American airline while U.S. Airways ranks at number five.
However, first the airlines are seeking approval for their $11 billion merger from the European Union. The European Commission announced today it would release its decision by July 23. The investigation, however, could be extended for up to three months if the commission deems it necessary.
The merger has caught the attention of two senators who wrote a public letter urging Attorney General Eric Holder and Transportation Secretary Ray LaHood to scrutinize the deal. Sen. Mike Lee, R-Utah, and Amy Klobuchar, D-Minn., are concerned that the joint venture will overly distort the market.
"We need to make sure consumers have as many choices as possible at the lowest prices, and that no airline or small group of airlines has a stranglehold on the market,” Klobuchar said, who is chair of the Judiciary Antitrust Subcommittee.
Her letter mentions that the merger would allow the joint company control more than 70 percent of the passenger gates at Ronald Reagan Washington National Airport. In accordance with federal antitrust law, she recommends the airlines be forced to give up some of its gates.
However, larger airlines can afford to fly to less populated cities and smaller airports. On the other hand, allowing the merger risks the possibility of artificially high prices. The merger would save American Airlines whose parent company, AMR Corp. filed for bankruptcy. This would preserve and stand to create countless jobs.
Later today the Senate will hold a hearing on the consequences of airline consolidation.