Nothing proves the old idiom that all politics is local more than a fight over jobs. And a proposed mega-merger between US Airways and American Airlines, two of the country’s largest carriers, has politicians in both parties taking sides.
The Department of Justice filed suit in August to halt the proposed merger on antitrust grounds. The department said the merger, which would create the world’s largest airline, would lead to higher fares for customers and less competition in an industry that has consolidated over the past two decades.
Attorneys general in Arizona, Florida, Pennsylvania, Tennessee, Texas, Virginia and the District of Columbia initially joined the Justice Department in filing suit. Texas has since dropped out.
But on Wednesday, seven big-city mayors sent a letter to Attorney General Eric Holder backing the deal. American and US Airways, they said, would “be at a permanent competitive disadvantage to Delta and United, each of which has been allowed to build superior route networks through mergers that were cleared by the Justice Department.”
The seven mayors represent cities where either American or US Airways has a hub. The mayors of Dallas and Fort Worth, Tex., Chicago and Miami-Dade County, which are American hubs, and the mayors of Charlotte, Philadelphia and Phoenix, where US Airways concentrates its flights, signed the letter.
The airlines “have done a really good job communicating with their employees on the ground that they need this merger to maintain their growth,” said Vinay Bhaskara, senior business analyst at the aviation website Airchive.org. “If you’re going to fight the DOJ, you have to court public opinion.”
The mayors urged the Justice Department to reach a settlement. And at least one state that initially opposed the deal, Texas, has already done just that.
Texas Attorney General Greg Abbott (R) announced Oct. 1 that his office had reached a settlement with the two airlines. As part of the deal, American agreed to maintain daily service to small rural airports around Texas. The settlement also requires the merged company to keep its headquarters in the Dallas-Fort Worth metro area.
Texas state Sen. Wendy Davis (D), who is running against Abbott for governor next year, sent a letter to President Obama in August asking the Justice Department to drop the suit.
Oklahoma Attorney General Scott Pruitt (R) also backs the merger. Pruitt’s office said Wednesday that it would file an amicus brief on behalf of the companies. Diane Clay, a spokeswoman for the attorney general, said in an interview that Pruitt’s office had reviewed the merger under state and federal antitrust laws.
“Once we did the review in this case, it was clear it did not violate either” state or federal law, Clay said. “Not only that, we have the largest maintenance facility in Tulsa, which would mean 6,000 jobs.” Clay called Pruitt’s support for the deal “a no-brainer.”
But others remain opposed to the deal. Virginia Attorney General Ken Cuccinelli (R), one of the state legal officers who joined the federal government’s suit, said in August that the merged airline would mean higher prices for customers at Washington’s Reagan National Airport. Together, US Airways and American hold 69 percent of the takeoff and landing slots at Reagan; if the two companies merged, there would be only one company offering service to 59 of the 71 cities US Airways currently flies to directly from Reagan.
On Oct. 1, when Texas dropped its objections to the merger, Arizona Attorney General Tom Horne (R) reiterated his own. US Airways already operates more than half the flights that take off and land at Sky Harbor International in Phoenix, according to airport statistics.
“Less competition means fewer choices, diminished service and higher prices. It is a law of nature. Arizona will continue the fight to promote competition in order to produce more service and reasonable prices for the people of Arizona,” Horne said.
The federal suit is scheduled to go to trial Nov. 25.