Passengers Fight US Airways-American Merger
SAN FRANCISCO (CN) - Travel agents and airline passengers asked a federal court to stop the merger of US Airways and American Airlines.
The $11 billion merger, proposed in February, would form the largest airline in the United States, with 24 percent of the passenger market.
If it goes through, the top four airlines would control 83 percent of a highly concentrated market, lead plaintiff Carolyn Fjord says in the antitrust complaint.
American CEO Tom Horton would get nearly $20 million in cash and stock shares, according to the complaint.
The plaintiffs claim that Horton and US Airways CEO Doug Parker met secretly to discuss the merger's effects, including employee layoffs, elimination of flight hubs and potential fare increases.
"Immediately after the merger announcement, prices were increased by $4 to $10 on roundtrip domestic flights by the big four airlines (Delta, United, American and US Airways), and Southwest followed. In April 2013, the big four airlines in lockstep increased the change fee from $150 to $200 with unbridled arrogance in the face of Senate and Congressional hearings," the complaint states.
It adds: "American and USAir have agreed that any cost savings by reason of the merger's elimination of duplicative functions will not be passed on to the consumer in forms of lower prices. To the contrary, every indication is that a merger of American and USAir will result in higher fares charged to passengers, notwithstanding any so-called cost savings."
Plaintiffs' attorney Joseph Alioto called the merger "skyway robbery" in a statement.
"They have already shown their willingness and cupidity by raising prices in lockstep, cutting services, eliminating capacity, which will require the American public to pay more for less and to accept discomfort and inconvenience as a regular routine," Alioto said.
The plaintiffs want the merger enjoined as a violation of the Clayton Antitrust Act.