By Steven Pearlstein
The Washington Post - November 12, 2013
Just three months ago, Justice Department antitrust enforcers
sued to stop U.S. Airways and American Airlines from merging. Now, the
parties have reportedly
agreed a deal in which the Justice Department will allow it to go
through in exchange for concessions from the companies. As the Post's Ashley Halsey reports, citing
people familiar with the matter the deal "will require the merged
airline to relax its stranglehold on Washington’s Reagan National
Airport, one of the people said. The compromise will also force the
combined company to give up slots at New York’s LaGuardia, Boston’s
Logan Airport and Chicago’s O’Hare airport, among others, by the end of
the year."
Back in August, Steve Pearlstein explained why the suit came to
be in the first place--and those slots at Reagan National are a key part
of the story.
For the last decade, the government has given the green light to a
series of airline mergers for one basic reason: the industry had fallen
into a pattern of ruinous competition. So many airlines were competing
for passengers and market share that none of the old-line carriers
could make any money. The only realistic choice for such “legacy”
carriers was either to merge or go through another bankruptcy
reorganization.
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