GAO: Merger between American, US Air would affect 1,600 routes

2013-06-20T00:00:00Z GAO: Merger between American, US Air would affect 1,600 routesThe Associated Press The Associated Press
June 20, 2013 12:00 am  • 

A government review finds that the merger of American Airlines and Tempe-based US Airways would reduce competition on more than 1,600 routes traveled by more than 53 million passengers.

That's a greater loss of competition than occurred with the 2010 merger of United Airlines and Continental Airlines, an analyst for the Government Accountability Office told a U.S. Senate panel on Wednesday.

Antitrust regulators at the Justice Department are reviewing the proposed American-US Airways deal, which also faces a vote by US Airways shareholders and would need approval by the federal judge overseeing American's bankruptcy case.

American and US Airways executives have defended their merger by noting that they overlap on only 12 nonstop routes.

But the GAO also considered connecting routes - those with at least one stop. GAO analyst Gerald Dillingham told a Senate aviation subcommittee that if the merger is approved, competition would decline because there would be one fewer airline flying those connecting routes.

There is at least one other airline on most of those 1,665 routes, Dillingham said, including low-cost airlines on 473 of them.

US Airways Group Inc. CEO Doug Parker, who will lead the combined company if the merger is approved, told the Senate panel that the deal would be good for consumers by creating a bigger airline with service to more locations than either American or US Airways can offer on their own. It would be the world's biggest airline.

"A broader airline network is better for passengers because it gives them more choices, a wider variety of services, and more competition on more routes," Parker said. He added that it would create a more powerful competitor for United and Delta, which are much bigger than No. 3 American or No. 5 US Airways.

US Airways and American Airlines parent AMR Corp. announced the proposed merger in February and hope to complete it in August or September.

Sen. Jay Rockefeller, D-W.Va., chairman of the Senate transportation committee, said Congress "must make sure that the advantages of a strong aviation sector benefit more than just shareholders."

Congress has no role in approving or rejecting the merger, although lawmakers can try to influence the Justice Department's decision.

At Wednesday's hearing, much of the discussion revolved around the fate of Reagan National Airport near Washington, where the combined American and US Airways would operate about two-thirds of the flights although carrying only half the passengers.

The Justice Department could require the merged company to give up some takeoff and landing slots at National, but Parker warned that could prompt the new American to reduce flights between Washington and smaller cities. JetBlue Airways, Southwest Airlines and others could be interested in gaining slots at the airport.

AT A GLANCE

• AIRLINE COMPETITION: American Airlines and Tempe-based US Airways compete on more than 1,600 U.S. routes, and competition would decline if they merge, according to a government analyst.

• MERGER MATH: The airlines say it's not true. US Airways CEO Doug Parker notes that the carriers overlap on only a handful of nonstop routes.

• DIFFERENT METHODS: While Parker counts only nonstop routes, the Government Accountability Office counts any pair of cities that American and US Airways connect, even if passengers must make a stop along the way. The GAO admits that other airlines fly most of those 1,665 connecting routes where American and US Airways compete.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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