Now that American Airlines and US Airways have settled their suit with the Justice Department, their planned merger can take off. But some worry that fares will soar as a result.
The settlement was welcomed by the airlines and mayors of affected cities from North Texas to Phoenix to Philadelphia and beyond. The Department of Justice had grounded the deal, fearing the loss of both competition and small-town service. Several state attorneys general joined the suit. But American CEO Tom Horton says the carriers calmed those concerns by surrendering some slots and gates at airports like Dallas Love Field, Washington Reagan and Chicago O’Hare.
“Credit goes to Texas Attorney General Greg Abbott, who took the first step in reaching a sensible settlement with us which really set the template for the deal we made with other state attorneys general," Horton said.
Abbott is in the midst of campaigning for Texas governor. He took a lot of political heat when he initially joined the Justice Department suit. Horton says the final deal wasn’t much different from what he expected at the start.
“I think it’s a reasonable settlement," Horton said. "It allows us to go build the world’s best global network.”
Horton himself will lose his job. US Airways' Doug Parker will become the CEO of the “new” American Airlines, as it again becomes the world’s largest carrier. It’ll reach 336 destinations in 56 countries. Horton argues that reach will make the carrier better for consumers.
But aviation expert Denny Kelly isn't so sure.
“You’re going to see regular fares go up,” Kelly said. “They may not go up instantly as soon as they merge, but they are going to go up. If you take a basic freshman economics course, the first thing they tell you is the less competition, the higher the price, and there’s going to be less competition.”
The merger still needs approval from other federal regulators. But the Justice Department had been considered the biggest obstacle.
The combined carriers expect to complete their merger next month.