A mere week after European officials approved the proposed merger between US Airways and American Airlines, the US Department of Justice has filed an antitrust lawsuit to block the merger. The DOJ cited largely a lack of competition in several local markets, as well as what they see as inevitable increases in both fares and fees with the lack of competition. Interestingly, as part of their complaint the DOJ cited US Airways’ CEO talking about how because of consolidation, 3 fare hikes were successful throughout the industry which wouldn’t have been possible with stiffer competition.
I share the broader sentiment that the suit is something of a surprise, since a) the DOJ has not stood up to many airline mergers as yet, and b) the Europeans approved the merger (contingent on concessions on one route), and they tend to be much stricter. Of course, transatlantic markets have stiffer competition than US markets, so that may explain it.
The airlines have promised to fight the suit, since they view their merger as complimenting each others’ networks, not consolidating networks. Time will tell whether this goes to court, the DOJ gets promises that placate its competition worries, or the airlines just back down from the threat of long litigation. Whatever the result, this certainly means that the deal will be somewhat more protracted then they had hoped, and might not happen at all.
What does this mean for my miles?
In the short term, there are no changes to either of the programs, and this development probably reinforces that you shouldn’t be too speculative since things can change rapidly. Since US Airways and American have continued operations as normal, they will continue to do so, likely longer than expected. The good news is that if you were wanting to take advantage of US Airways 100% bonus miles promotion, you’ll likely have a bit longer to keep/spend those miles in the Star Alliance. Of course, if you were excited about the possibility of your US Airways miles becoming American/OneWorld miles, that will likely have to wait.
What are you thoughts on the move? Surely someone with a brighter legal mind than myself can opine on these events. Are you glad it’s getting (possibly) blocked? Is this really anti-competitive?
— Ethan Carter