Details of the US Airways/American Airlines Anti-Trust Settlement That Allows the Merger to Proceed

by Gary Leff

Here’s what US Airways and American gave up in order for the Department of Justice and states to withdraw their anti-trust suit against the proposed merger.

  • They will give up 52 slot pairs at Washington National Airport (and gates and related facilities). There will be 44 fewer daily departures (out of a combined 290 that US Airways and American now operate) with the rest of the slots being the ones JetBlue already leases getting sold. They also have to keep small community service for a period of time.

  • They will give up 17 slot pairs at New York LaGuardia Airport (and gates and related facilities). They anticipate 12 fewer daily departures (out of a combined 175 that US Airways and American now operate). Southwest will get to buy the slots it leases from American currently.

  • They will give up 2 gates and related facilities at each of Boston, Chicago O’Hare, Dallas Love Field, LAX, and Miami.

  • Maintain the Charlotte, New York JFK, Los Angeles, Miami, Chicago O’Hare, Philadelphia, and Phoenix hubs consistent with historical operations for a period of three years.

  • Continue to provide daily scheduled service from one or more of its hubs to each airport that has current scheduled daily service from either American or US Airways, in each of the states that had joined the anti-trust suit. (Texas settled its suit, and that agreement gets modified to give them everything that was contained in the settlement.) Service that is discontinued as the result of slot and facilities divestitures are exempted, and holidays are excluded.

Ultimately only Washington National is hugely significant here, the DOJ ensures that the two airlines together do not increasing their dominance. I count 42 current American Airlines roundtrips at National currently, though that’s just eyeballing things. So roughly combined the two airlines will be the size that US Airways is today at National, and they will give up owned slots that are leased out as well so that they can’t get bigger later.

The LaGuardia slots seem strange to me, other than that other airlines were asking to have those redistributed, since neither American nor US Airways were dominant there.

While giving up gates at LAX is a pain, they’re going to want to consolidate operations at all of these major airports anyway to the concession here is across the board a token. They’re giving up US Airways gates at LAX and Miami where they’ll want to shift over to use American’s operations anyway. And there’s a service guarantees that likely contains more fine print that we’ll learn about soon enough.

In other words, DOJ settled for holding the two airlines to the current size of US Airways at National, extracted some slots at LaGuardia where there wasn’t going to be a material issue with competition from this merger anyway, plus a list of feel good items. Mos of this, beyond the concessions at Washington National, is DOJ face-saving.

Southwest gets American out of Dallas Love Field (this reduces competition…) and gets to own its LaGuardia slots. They were also a prime proponent of extracting more slots from the deal at LaGuardia.

It’s shocking, given these terms, that the deal couldn’t have been reached months ago — and says quite a lot about how weak the case was since one has to imagine this wasn’t all that much more than the airlines would have given up without ever even filing the suit in the first place.

Service guarantee airports are as follows:

    State Code Airport
    Arizona
    FLG FLAGSTAFF
    PHX PHOENIX
    TUS TUCSON INT’L
    YUM YUMA

    Florida
    DAB DAYTONA BEACH
    EYW KEY WEST
    FLL FT. LAUDERDALE INT’L
    GNV GAINESVILLE
    JAX JACKSONVILLE INT’L
    MCO ORLANDO INT’L
    MIA MIAMI INT’L
    MLB MELBOURNE KENNEDY
    PBI WEST PALM BEACH INT’L
    PNS PENSACOLA REGIONAL
    RSW FORT MYERS REGIONAL
    SRQ SARASOTA/BRADENTON BRADENTON
    TLH TALLAHASSEE MUNICIPAL
    TPA TAMPA INTERNATIONAL
    VPS VALPARAISO / FT WALTON BEACH

    Michigan
    AZO KALAMAZOO KAL/BTLCRK
    DTW DETROIT WAYNE CO
    FNT FLINT BISHOP
    GRR GRAND RAPIDS KENT CTY
    MQT MARQUETTE
    TVC TRAVERSE CITY

    Pennsylvania
    ABE ALLENTOWN BETHLEHEM
    AVP WILKES-BARRE/SCRANTON
    ERI ERIE INTL
    IPT WILLIAMSPORT
    MDT HARRISBURG INTL
    PHL PHILADELPHIA PA/WILM’TON INT’L
    PIT PITTSBURGH INT’L
    SCE STATE COLLEGE

    Tennessee
    BNA NASHVILLE METRO
    CHA CHATTANOOGA LOVELL
    MEM MEMPHIS INTL
    TRI TRI-CITY AIRPORT MUNICIPAL
    TYS KNOXVILLE TYSON

    Virginia
    CHO CHARLOTTESVILLE ALBEMARLE
    DCA WASHINGTON NATIONAL
    IAD WASHINGTON DULLES
    LYH LYNCHBURG
    ORF NORFOLK INTL
    PHF HAMPTON INTL
    RIC RICHMOND/WMBG INT’L
    ROA ROANOKE MUNICIPAL

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I agree with you that the only truly material concession is at DCA. And this one is, candidly, a mixed bag for consumers. I guess they’ll be a little more competition, particularly on routes served by JetBlue, but several smaller cities are probably going to lose their nonstop service to DCA. Overall, I can’t say it’s really going to materially help anybody (except a few competing airlines, I guess).

    The LGA divestment makes no sense because AA and US aren’t particularly strong at that airport. You could make an argument that it would be better for consumers if there was a more effective counterweight to Delta on Long Island. You could also argue that a few more slots in the hands of smaller competitors MIGHT results in a fewer lower fares. But, realistically, nobody is going to notice these miniscule changes.

    As you note, the Love Field divestment seems to hurt consumers. AA doesn’t currently fly to that airport, but had tentative plans to do so next year. Now, I guess, we’re certain they won’t. But, realistically, AA would have been the only logical competition to Southwest at that airport, as AA already has a loyal following in town because of its massive DFW presence. Is the DOJ making AA give those gates to Southwest? If the gov’t is seriously interested in fostering competition, that’s just nuts.

  2. Southwest could certainly use 2 more gates at LAX, but I wonder how many weeks it will be until the US Airways club at LAX Terminal 1 closes its doors.

    Will this and other US Airways clubs close before or after United Club members lose their entry privileges?

  3. This isn’t DOJ face-saving. This is DOJ playing surrender monkey and sacrificing consumers way too easily.

  4. Do you think this means the new American will have to end the DCA to BOS/LGA shuttle? Can they afford to keep that going with the limited slots they will have post-merger?

  5. Dear DOJ: I don’t know exactly whom you were representing in this suit and settlement, but it sure as heck wasn’t me or, for that matter, any other consumer. Boring!! Oh, well, now the wait is over. My airline gets handed to Dougie. He either makes a go of it and does well or f’s it up as badly as American Worst. *sigh* Now I gotta root for Dougie.

  9. Putting southwest into DCA should have a net positive effect on that market and be all the bureaucrats cared about in the first place………yes jaded but why drag this out for so long just for that concession…………it looks like the government was being a bully here and kicking AA while they were down……..but it’s been a long long time since our government made sensible rules for airlines……………

Comments are closed.