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What Made Texas Attorney General Drop Lawsuit Against American Airlines Merger?
By Eddy Metcalf

October 2, 2013 - Back in August Greg Abbott, Texas’ State Attorney General, filed a lawsuit challenging the proposed merger between American Airlines and U.S. Airways. Abbott stated, “We believe that actions by the airlines and their officials violate antitrust laws. In fact, the legal violations appear so overt that it would offend my oath of office not to take action." 

“What the proposed merger seeks is not competition in the free market, but it expressly seeks the elimination of competition so the airlines no longer need to compete for customers. It turns the free market on its head.” 

“This is just a small sampling of troubling things. First, the airline executives’ own words raise antitrust concerns. Second, the goal of the airlines appears to undermine free markets. The combined airlines will be able to extract higher fees and impose more onerous fares only because the free market system will be so distorted.” 


“The legal action is based on evidence such as internal emails, investor presentations and other comments by top executives of the airlines. Those documents reveal their thinking about how shrinking competition in the airline industry and, hence the merger will allow the airlines to pile even more bag fees, ticket change fees and increased fares on customers. American and US Airways compete directly on thousands of heavily traveled routes. The merger would allow the new company to shed that competition and distort the marketplace.

Kevin Mitchell, chairman of the Business Travel Coalition, said that the merger casts “a spotlight on how uncompetitive and cozy U.S. airlines have become.” The question now becomes how cozy has Abbott become with American Airlines and U.S. Airways. 

On Tuesday Abbott announced the state of Texas had reached an agreement with American Airlines and US Airways on its proposed merger. Abbott states the agreement resolves the State’s objections by American Airlines agreeing to maintain daily service to rural airports across the State of Texas. Additionally, the airlines entered into a binding agreement to maintain the merged company’s headquarters in the DFW metropolitan area.



“The result is a settlement agreement that serves the best interests of the State of Texas, continues daily air service to 22 airports across the state, and preserves thousands of jobs across the state.” 

In this agreement between American Airlines, U.S. Airways and the state of Texas there is nothing that addresses the concerns raised by Abbott’s August 2013 lawsuit that included violations of “antitrust laws”, “shrinking competition”, “increases in bag fees, ticket change fees and increased fares”, etc.  

The Agreement: American Airlines and U.S. Airways agree to; 

A. Continued Service to Texas Airports

B. Hub Status for DFW: The Merged Company will maintain Dallas/Fort Worth International Airport as a "large hub airport" 

Tom Horton, chairman, president and CEO of AMR (parent company to American Airlines) said, "I'm pleased we were able to find common ground and gain the carefully considered support of the Attorney General in our home state." 

“This is an important step forward for American Airlines, for Texas, and for our customers and people of both American and US Airways. Texas has long played a lead role in our company's history, and this agreement is assurance of our commitment to maintain and enhance the outstanding levels of service and connectivity that the new American will provide to the citizens of Texas. 

“This merger will enhance job security and career opportunities for our combined Texas based employee base of nearly 25,000. The combined airline will fly more people and more goods to more places while providing more competition to benefit customers in the U.S. and abroad. We thank Attorney General Abbott for his partnership in finding a solution and also thank the people of American and US Airways for their continued support of the merger."

In August the State of Texas, (Texas Lawsuit) along with Arizona, Florida, Pennsylvania, Tennessee, Virginia, the District of Columbia and the U.S. Department of Justice, filed a complaint in federal court challenging the proposed merger between American Airlines and U.S. Airways.
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