American, U.S. Airways surrender slots to win merger approval

Posted by Greg Gordon on November 12, 2013 


Ronald Reagan Washington National Airport is a popular gateway to the nation's capital. It could play a pivotal role in saving an $11 billion merger between American Airlines and US Airways.


— The Justice Department announced on Tuesday, Nov. 12th that it has cleared the $11 billion merger of American Airlines and US Airways to form the world’s largest airline, but it did so only after the airlines agreed to surrender slots to accommodate dozens of daily flights to discount carriers at seven major airports.

Under the agreement, detailed in a proposed settlement that still requires the approval of a federal judge in Washington, the airlines must divest gates and slots to low-cost carriers at airports in Boston, Chicago, Dallas, Los Angeles, Miami, New York and, most of all, at Reagan National Airport outside the nation’s capital. The new airline would divest 104 slots, or takeoff and landing rights, at Reagan.

The settlement is likely to climax a round of consolidation after a tumultuous period in which the nation’s biggest airlines filed for Chapter 11 bankruptcy protection. Assuming the latest deal is approved, six of the largest airlines will have merged to create three mega carriers – the new American, Delta and United.

Despite that concentration of pricing power, U.S. Attorney General Eric Holder said in a statement that the settlement “has the potential to shift the landscape of the airline industry.”

“By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country,” he said.

The Justice Department, six state attorneys general and the District of Columbia sued in August to block U.S. Airways’ acquisition of American, leading to negotiations over what divestitures might satisfy the concerns of antitrust regulators.

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