Judge Rules American Airlines And U.S. Airways Can Merge, Creating World's Largest Airline
On Wednesday, after a drawn-out battle between the Justice Department and the wannabe-merged American Airlines and U.S. Airways, a federal judge ruled that the two major airlines were allowed to join forces. Back in February, AA and U.S. Airways announced that they’ll merge to create the world’s largest airline — but the U.S. Department of Justice claimed that having one chief airline would eliminate competition, and up the general price of travel. (A dictatorship in the sky, if you will.) Federal antitrust laws are in place to prevent just that, and the Justice Department insisted a merge would be in violation of those rues.
Back in September, Judge Sean H. Lane approved American Airlines' plan to recover from their economic woes. The airline filed for bankruptcy two years ago, and later agreed to merge with U.S. Airways to get themselves out of the red. At the time, Judge Lane made clear that no merge could happen until the Justice Department approved of the merge. Then, two weeks ago, the Justice Department settled their case with the two airlines, but required the merged airline give valuable slots and gates to low-cost airlines to promote competition and, in turn, low prices. All that was needed was for Judge Lane to approve the settlement, which he did Wednesday.
So, what now? Well, the planned merge will be named American Airlines Group, and would keep AA’s name and branding, while holding on to U.S. Airways’ management. After the two join forces, they'll share 10,000 employees and $40 billion of revenue. Each day in America, the merged airlines would control nearly 7,000 flights: in other words, seven flights of every ten from Reagan National Airport. The deal is set to close Dec. 9.
There has been widespread concern that the merge would hurt airline consumers. As Bustle reported in August:
The Justice Department has approved mergers in the past: Southwest and AirTrain, United and Continental, and Delta and Northwest. Still, none have had the heft that AA and U.S. Airways merger would bring. Some also fear that small aircraft hubs would be closed as a result of the merger (the bigger-scale the merger, the greater chance there is that a joint corporation wouldn’t financially need to keep them open).
At present, U.S. Airways Advantage has significantly lower fares than AA — for a return flight between Miami and Cincinnati, the difference is $471 versus $740, according to the Justice Department. This competition is healthy, and promotes lower fares for passengers: for example, JetBlue’s competitive presence has made U.S. Airways’ prices drop by a third.
World: meet your newest, biggest airline.