WASHINGTON — It was supposed to be the capstone merger — the culmination of nearly a decade of consolidation that has transformed the airline industry and winnowed a crowded field of players into just a handful.
But Tuesday, antitrust officials filed a lawsuit blocking the proposed $11 billion merger between US Airways and American Airlines’ parent company, AMR, saying the deal would hurt consumers by leading to higher airfares and fees.
The action puts the brakes on a union that would have created the world’s largest commercial air carrier and would have put 86 percent of U.S. air travel in the hands of four big airlines.
“By challenging this merger, the Department of Justice is saying that the American people deserve better,” Attorney General Eric Holder Jr. said in a statement Tuesday. “This transaction would result in consumers paying the price — in higher airfares, higher fees and fewer choices.”
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The civil suit, filed by the Justice Department, six state attorneys general and the District of Columbia, marked a break from the government’s usual rubber-stamping of big airline deals, including Delta’s deal with Northwest in 2008 and United’s merger with Continental in 2010.
Antitrust experts said the deal between US Airways and American Airlines proved to be one too many for the Obama administration.
“If you allow this one, and now you’ve got a new largest airline, how are you going to say no?” said Albert Foer, president of the American Antitrust Institute. “At some point you’re going to have to say no.”
The Justice Department singled out the effect the merger would have on fliers in the Washington, D.C., area. The merged airline, officials said, would become the dominant carrier at Reagan National Airport, controlling 69 percent of the slots.
As a result, the complaint said, passengers would probably see higher prices and fewer choices if the merger were to go through as proposed.
Officials said the presence of JetBlue at National Airport — which they said has already caused fares to drop — would also be threatened. In 2010, JetBlue entered into an agreement with American Airlines in which it trades slots at New York’s John F. Kennedy International Airport for American’s slots at National.
AMR and US Airways said they would fight the lawsuit in court rather than seek a compromise that might lead to a settlement. “Integrating the complementary networks of American and US Airways to benefit passengers is the motivation for bringing these airlines together,” their joint statement said. “Blocking this pro-competitive merger will deny customers access to a broader airline network that gives them more choices.”
The federal government concluded American Airlines and US Airways compete directly on thousands of routes, representing business worth tens of billions of dollars in annual revenue.
The complaint said US Airways helps bring down flying costs because it offers low fares to travelers willing to take connecting flights through the company’s cheaper hubs, such as Charlotte, N.C., rather than paying more for nonstop flights run by “legacy” airlines such as United and American. Joining with American, the complaint said, is likely to prompt US Airways to stop offering those low fares.
“If this merger goes forward, even a small increase in the price of airline tickets, checked bags or flight-change fees would result in hundreds of millions of dollars of harm to American consumers,” said Bill Baer, the Justice Department’s top antitrust official.
The department’s view was corroborated in June by the Government Accountability Office, which released a report warning that the new airline would be the only carrier providing nonstop service on seven of the 12 routes where they currently compete.
The merger also would reduce competition on 1,665 other domestic routes, the report said, and create new competition in just 210 routes.
The news hit American Airlines’ stock hard Tuesday, sending it down more than 45 percent in regular trading. US Airways Group’s was down more than 13 percent.
Though Baer said he was open to discussion aimed at resolving the lawsuit, a senior airline official said American would not enter into talks.
“We’re fighting this. We’re not talking about settlements,” said the official, who spoke on the condition of anonymity to discuss the issue freely.