American – US Airways Merger “Gross Miscarriage of Justice” When DOJ Case Dropped

A few weeks back, ProPublica published a very interesting article on the airline industry in the post-merger world, detailing the fall over a decade from nine major airlines to five. The piece has a heavy focus on the American / US Airways merger. It remarks on the DOJ dropping their lawsuit and the intense lobbying campaign involved:

In the lawsuit, the government was effectively admitting it had been wrong. Then a mere three months later, the government stunned observers by backing down. The Justice Department’s abrupt reversal came after the airlines tapped former Obama administration officials and other well-connected Democrats to launch an intense lobbying campaign, the full extent of which has never been reported.

Some lawyers and officials who worked on the American-US Airways case now say they were “appalled” by the decision to settle, as one put it. “It was a gross miscarriage of justice that that case was dropped and an outrage and an example of how our system should not work,” said Tom Horne, the former state attorney general of Arizona.

The article has an interesting viewpoint on the ultimate approval, definitely worth checking out the full read here.

What are your thoughts? Was this just normal DC lobbying in support of a merger that resulted in adequate concessions or was something more afoot?

The Motley Fool has already opined. They feel that there’s “not much evidence of collusion or pricing power” and that the DOJ made the right call.

the-new-aa

Comments

  1. Let’s be honest this last super merger was all but preordained when they let Delta/Northwest and UAL/Continetal go through. Otherwise AA and USAir were doomed by their lack of scale.

  2. The DOJ should never have allowed the American merger. Fares have gone up 20-30% since the merger, pilots and flight attendants have been given 20-30% raises and it’s the customer who once again is the loser.

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