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Mediation for AA/US Airways Merger

The planned merger of American and USAir, which has been challenged by the Justice Department will go to mediation, in hopes of finding a solution that will be acceptable to the airlines and the Federal government. A mediator has been selected; if an agreement can't be reached by November 25, the case goes to trial. Meanwhile, four airport operators that host AA and USAir hubs have asked to be allowed as "friends of the court" to support the merger. Here's a link for more info in USA Today.

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This case seems very peculiar to me.  I have never understood why what is acceptable for some large airlines - Delta and United - is considered unfair competition for others.  The airlines have been growing and merging since the Pan Am Clipper days.  Why is this transaction any different ?

In a nutshell: AA and USAir are making exactly the argument you are, and the Justice Dept. is saying, in effect, "We shoulda stopped them, too."


Obviously a lot of issues (both in terms of fares and of maintaining service to smaller cities), but not clear why the line's been drawn here.


Meanwhile, Texas pulled out of the suit, Florida may follow, mayors of cities with AA and USAir hubs have backed the merger, airport operators are chiming the mediation may end up being Justice's way of backing out without egg on face by making the adjustments that are needed, like not leaving one airline with 67% of the slots at Washington National...


Anti-merger views generally argue that the mergers reduce competition, raise fares, and cut service to smaller cities. Others might reply that the key to these new large carriers' survival is not so much that they got larger as that all of the carriers involved passed through bankruptcy, shedding workers, benefits, contracts and perhaps maintenance standards as they went...

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