Reduction of airport slots key to address antitrust claim levied against AMR-US Airways merger

By Rizza Sta. Ana

Nov 10, 2013 10:44 AM EST

On Monday, Attorney General Eric Holder said the US Justice Department was intent to ensure market competition would be favorable in the airline and travel industry. The government agency had filed a lawsuit against parent of American Airlines AMR Corp and US Airways regarding the national economic effects of the planned airline merger.

"What we have tried to focus on is to make sure that any resolution in this case necessarily includes divestitures of facilities at key constrained airports throughout the United States. We hope that we will be able to resolve this short of trial, but if we do not meet those demands that we have, we are fully prepared to take this case to trial," he said. "We will not agree to something that does not fundamentally resolve the concerns that were expressed in the complaint."

The Justic Department reportedly insisted that both airlines to reduce its landing and take-off slots in several US airports, including Reagan National. Once the airlines would comply, the government agency would be dropping its efforts to block the merger, Holder said.

According to Reuters, both American and US Airways control 69% of total takeoff and landing slots at the Washington airport. 55% of the slots are operated by US Airways, while the remaining 14% are with American.

On the other hand, several skeptics did not see that the parties would be able to arrive at an agreement real soon.

Senate Judiciary Committee's antitrust subcommittee staffer Seth Bloom said, "He's saying you need divestitures nationally...and so the airlines have to make a fundamental change in their merger proposals. It's a very difficult case to settle."

Antitrust expert Herbert Hovenkamp said, "I think it's a positive sign (of potential settlement), but it's important not to over-read it. The government is asking for a lot and the parties want to give up as little as possible."

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