Airline Passenger Group calls for transparency in American US Airways merger settlement with Justice Department
WASHINGTON, Feb. 13, 2014 /PRNewswire-USNewswire/ — FlyersRights.org, the largest airline passenger advocacy organization, has filed comments with the US Department of Justice calling for the release of lobbying, political contribution and negotiating communications that preceded the sudden November settlement of the Obama Administration’s antitrust suit to block the largest airline merger in US history.
Under the Tunney Act, the US District Court must consider public comments and only give final approval of the merger settlement if it finds it to be “in the public interest.” The law was enacted by Congress during the Nixon and George W. Bush Administrations to prevent undue influence by lobbying and political contributions on Department of Justice antitrust settlements.
FlyersRights.org President Paul Hudson noted that “The settlement does not meet the basic smell test as being in the public interest due to massive and secretive lobbying of the Obama Administration by parties with a financial interest in higher airfares at the expense of airline passengers. FlyersRights.org filed a Freedom of Information request which was denied in its entirety by the Department of Justice.”
“The court should require full disclosure of the papers leading up to the settlement, political contributions by those lobbying the Obama Administration to approve the merger settlement.” See www.nytimes.com/2013/11/16/business/baffling-about-face-in-american
The proposed merger settlement would require sale of some slots at Reagan National Airport and New York City airports to JetBlue, Southwest and perhaps other airlines but would not address or stem concentration of the airline industry. The merger would create the world’s largest airline and give four mega airlines -American, United, Delta and Southwest control over 85% of all domestic flights.
FlyersRights.org contends, “there is no doubt the proposed settlement is both unnecessary and will lead to a complete oligopoly in US air transportation.” It further noted the airline industry has unique features that make it easy to abuse passengers with lack of competition including:
1. Exemption from all state, local and most federal consumer protection laws, due to court interpretations of the Airline Deregulation Act of 1978.
2. Complete Protection from foreign competition on domestic routes due to Cold War era national security laws, and with new entrants not having significant access to foreign capital.
3. Airline profits at record levels due to prior mergers and lower fuel costs since 2010. American Airlines stock soared an astounding 1,800% for year ending November 2013 and the average US based airline stock rose 100%. A 50% increase in profits is predicted for 2014 over record 2013 profits, by the International Air Transport Association.
Competition is the only protection consumers have against degraded service and higher prices. Accordingly, the court should require full disclosure of settlement negotiations and lobbying and hold an evidentiary hearing where passenger groups can be represented as interveners or amicus parties.
For full copy of Flyersrights.org comments and those of other consumer organizations see