cubguy

Flaws found in US DOJ lawsuit against American/US Airways merger | Aspire Aviation

flybywire44

This article would have been strengthen by dissecting the Washington, DC market as it did the LAX market.

US Airways and American are a minority in the DC market and only operate 25% of flights between IAD/BWI/DCA. Airways also only 69% of DCA flights while SWA has 74% of BWI flights. UAL is 70% of IAD.

Meanwhile UAL is 75% of EWR and DAL is 72% of ATL... I don't get it.

ForeverFO

None of us get it because the whole thing is political, and possibly cash driven. As in, secret brief cases stuffed with cash being handed out like party favors.

Of course I have no evidence, but nothing the federal government does these days inspires any sort of trust.

ncpilot624

Completely agree. Still a great article. Way to may facts in there for the DOJ.

nwa757

The proposed settlement is very interesting. It would be great to see it proposed and signed off on this month.

Aspire Aviation’s proposed settlement
Thus, Aspire Aviation has prepared the following proposed settlement, which will allow US Airways and American to merge so long as the following conditions are met.

-Sell the 18 Washington Reagan slot pairs mentioned in the lawsuit (8 leased via the slot swap with JetBlue plus 10 additional pairs) to JetBlue at a price approved by the US DOJ
-Divest an additional 35 slot pairs to the federal government for the DOT and/or DOJ to redistribute as it sees fit. The combined carrier would hold around 300 slot pairs post-merger ceteris paribus (250 US Airways, 50 American); such a divestiture would keep the merged carrier’s Reagan slot share at roughly the same level as that of pre-merger US Airways, which the DOJ explicitly signed off when it approved the US Airways/Delta slot swap in 2010.
-The merged carrier would be required to sell a Brazil route authority to serve Sao Paulo, along with a Sao Paulo slot pair to any carrier that desires it at a price approved by the DOJ. If no airline decides to purchase the slot pair within one year, the merged carrier would be allowed to keep the slot pair and route authority without penalty and would continue operating to Sao Paulo with the authority and slot pair during the sale period.
-Support legislation to immediately repeal the Wright Amendment versus its current termination date and increase the cap on number of gates allowed to be in use at Dallas Love from 20 to 28.
-Require the merged carrier to make up to 5 gates available at Charlotte’s Concourse B available for use by competing airlines under a common-use scheme. The merged carrier would be allowed to continue using these gates when not requested by other airlines.
-Require the merged carrier to commit to continue operating the following routes non-stop for a duration of at least 5 years from the date of the closing of the merger unless the market gains new non-stop service from a competing carrier and/or the merged carrier fails to record a net profit for six straight quarters.
Phoenix-Honolulu, Kona, Lihue, and Kahului (nearly 15% of the markets involve these four destinations)
St. Thomas-Charlotte, Philadelphia, Miami, and New York John F. Kennedy
St. Croix-Charlotte
-Require the merged carrier to serve at least 76 non-stop destinations from Washington Reagan at any given moment so as to protect small city access to Reagan
-Require the merged carrier to make up to 5 gates available on Chicago O’Hare Terminal 3, Concourse K available for use by competing airlines under a common-use scheme. The merged carrier would be allowed to continue using these gates when not requested by other airlines. The merged carrier would also be required to withdraw any objection to expansion and/or construction of a new terminal at Chicago O’Hare.
-Violating any of these conditions would require the merged carrier to pay a pre-negotiated fine to the US DOJ.

With these conditions, Aspire Aviation believes that the anti-trust problems with the American/US Airways merger will have been addressed to a sufficient degree that the merger should be allowed to proceed given the merits of the merger, such as an expanded network that has the scale to compete with United Continental and Delta Air Lines.

pilotpayne

As far as DC goes you know only DCA matters....
Your DC argument is kind of false, while the the %s are right you know anyone can fly as much as they want into bwi/iad anytime they want. Its about Airways keeping 69% of the flights a a slot controlled airport.

flybywire44

My argument that DCA competes against BWI and IAD, which makes Airways a minority player in the overall market. You are correct that other carriers can add any amount of frequency and aircraft size at BWI/IAD, while newAA will remain limited.

This may not be the DOJ playing hard ball as it may be Doug Parker playing hard ball because of how strong the AA case is.

I am amazed that the Washington community wold rather have less direct service and more one-stop service.

pilotpayne

Look I understand you want the merger to go on but do you really think Airways should have that many slots at DCA?
Doug playing hard ball is what got him into this, he should have divested some slots an kept his mouth shut.

lolwut

Why shouldn't they? They've acquired these assets over time, just like all the other airlines have acquired assets that help them further their business.

They use them to operate a hub. Having a significant portion of the flights out of an airport is just that, a hub. And a hub requires a minimum threshold to be profitable. You can't just chop away at it every time someone wants something. They have a competitive advantage there, just like other airlines have competitive advantages at other airports.

flybywire44

pilotpayne, you disregarded the fact that taking slots away form newAA in DCA may not increase competition, but may just reshuffle direct routes away from DCA to already served markets. I personally think its idiotic to limit direct air service to our capital city.

I don't see how you'd know what Parker did or should have done, but I would imagine he ran some kind of analysis and found litigation the more value advantageous method or moving this merger forward. newAA is a minority player in the DC market in terms of total number of flights and total number of seats. newAA is well within it's right to contest the DOJ and seek to preserve as much of it's operations as it can manage to retain. Parker must have a strong case for him to hardline the DOJ and risk a legal dispute.

Parker may just be playing poker and so far he seems to have a decent hand to play.