NWAA330
Topic Author
Posts: 196
Joined: Fri Jun 27, 2003 5:18 am

DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 12:57 am

Didn't see this posted anywhere, let me know if it was.

http://news.yahoo.com/exclusive-just...n-us-airways-merger-234057214.html

I know we've had many threads in the past on the topic, but is it standard to depose management at this point in the approval process over such a major issue?

"The sticking point in talks between the Justice Department and the companies is whether the airlines will agree to sell slots, take off and landing rights, to reduce their dominance at Reagan National Airport."

"US Airways CEO Doug Parker told lawmakers in congressional testimony last week that requiring the combined company to surrender slots could mean fewer flights to small and medium-sized cities."

Best,

NWAA330
To Fly is to Live.
 
capitalflyer
Posts: 268
Joined: Tue Nov 16, 2010 2:43 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 1:33 am

The longer they fight this, the more slots they will have to give up. If they would have just come forward and offered to relinquish a dozen slots then all would be well. Now it will probably be more.

Good faith goes a long way.
 
D L X
Posts: 11663
Joined: Thu May 27, 1999 3:30 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 1:35 am

Any need for a whole new thread on this?
 
Cubsrule
Posts: 11516
Joined: Sat May 15, 2004 12:13 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 1:35 am

Quoting capitalflyer (Reply 1):
The longer they fight this, the more slots they will have to give up. If they would have just come forward and offered to relinquish a dozen slots then all would be well. Now it will probably be more.

Has Parker ever said that they are unwilling to give up any slots?

Quoting NWAA330 (Thread starter):
I know we've had many threads in the past on the topic, but is it standard to depose management at this point in the approval process over such a major issue?

Where DCA is involved, what is the "standard?"
I can't decide whether I miss the tulip or the bowling shoe more
 
N908AW
Posts: 864
Joined: Thu Aug 11, 2005 1:05 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 1:54 am

Quoting NWAA330 (Thread starter):
"US Airways CEO Doug Parker told lawmakers in congressional testimony last week that requiring the combined company to surrender slots could mean fewer flights to small and medium-sized cities."

He may be right in a worst-case scenario, but in all likelihood the final slot count for AA/US will resemble what US has now, if not marginally smaller.

Remember, of course, that there will be less 50-seat flying after the merger anyway. There are a lot of thin routes that US runs on CR2s right now that they may opt out of soon -- especially if US keeps CLT and PHL as main east coast hubs going forward. Ostensibly DCA has fewer flight banks than a true hub as it is, meaning they have an awful lot of reliance on pure O&D in and out of DCA on a lot of routes. So, regardless of how many slots AA/US has to relinquish, I don't think you're going to see things like three daily DCA-BGR or four daily DCA-MEM when the smoke clears.
'Cause you're on ATA again, and on ATA, you're on vacation!
 
Cubsrule
Posts: 11516
Joined: Sat May 15, 2004 12:13 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 2:06 am

Quoting N908AW (Reply 4):
He may be right in a worst-case scenario, but in all likelihood the final slot count for AA/US will resemble what US has now, if not marginally smaller.

What legal basis is there for requiring US/AA to divest more slots than AA has now?
I can't decide whether I miss the tulip or the bowling shoe more
 
capitalflyer
Posts: 268
Joined: Tue Nov 16, 2010 2:43 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 2:44 am

Quoting Cubsrule (Reply 5):
What legal basis is there for requiring US/AA to divest more slots than AA has now?

As the article states, the depositions may indicate that DOJ has serious antitrust concerns about AA/US merger. Anti trust law would trump any slot regulations.
 
jfk777
Posts: 5863
Joined: Tue Aug 22, 2006 7:23 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 12:13 pm

AA/US would have 68% of slots at National airport, this is not your regular homtown airport. Since it is where it is 68% is unaccceptable. AA/US should do something about it before its done for them, even if smaller cities loose service politics is about "appearances".
 
FlyPNS1
Posts: 5272
Joined: Wed Dec 01, 1999 7:12 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 12:26 pm

Quoting jfk777 (Reply 7):
Since it is where it is 68% is unaccceptable.

When it's a slot controlled airport. If DCA wasn't slot controlled, this wouldn't be an issue.
 
Cubsrule
Posts: 11516
Joined: Sat May 15, 2004 12:13 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 12:40 pm

Quoting capitalflyer (Reply 6):
As the article states, the depositions may indicate that DOJ has serious antitrust concerns about AA/US merger. Anti trust law would trump any slot regulations.

Way to dodge the question. What legal basis (i.e. antitrust law basis) would permit DoJ or a court to force the divestiture of more slots than AA holds now?
I can't decide whether I miss the tulip or the bowling shoe more
 
MIflyer12
Posts: 2010
Joined: Mon Feb 18, 2013 11:58 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 1:01 pm

Quoting Cubsrule (Reply 9):
Way to dodge the question. What legal basis (i.e. antitrust law basis) would permit DoJ or a court to force the divestiture of more slots than AA holds now?

The DOJ leads an anti-trust inquiry according to rules of 'horizontal market competition' long-set by the DOJ and FTC for airline mergers. As with a lot of things regulatory, it's presumtively law until it gets rejected in court. The DL/NW and UA/CO meregers faced (and passed) the same tests. It's easy enough to argue that even the same number of slots (solely AA's holdings to your question) - held by a much bigger carrier - could be more competitively damaging.
 
jfk777
Posts: 5863
Joined: Tue Aug 22, 2006 7:23 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 1:34 pm

Quoting FlyPNS1 (Reply 8):
When it's a slot controlled airport. If DCA wasn't slot controlled, this wouldn't be an issue.

IF AA decided to give up their ORD Hub and United had 70 % of ORD 's slots no onw would think twice about it. But this National airport in Washington DC where every congressman and Senator fly through, its a different type of place. Maybe its time to bring back the "DC Jet" concept United and Usair had when they were going to merge.
 
IADCA
Posts: 1351
Joined: Mon Feb 26, 2007 12:24 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 2:12 pm

Quoting Cubsrule (Reply 9):
Way to dodge the question. What legal basis (i.e. antitrust law basis) would permit DoJ or a court to force the divestiture of more slots than AA holds now?

There's nothing that prevents it. There have been instances of the agencies (though this may have been FTC) forcing merging parties to divest the larger of two products in the same space. However, as far as I remember, those have come in the context of multi-market consumer products mergers. Here I'd be surprised if they did anything like that, but they legally could. For example, here's a theory that might produce such a result: "There are only so many possible combinations of connecting itineraries on the East Coast, and only 9 viable domestic hub airports (JFK, LGA, EWR, PHL, BWI, IAD, DCA, CLT, ATL) and all are spoken for. This merger would give one airline hubs at 4 of the 9. We need to force them to divest a hub." DCA is picked for that because it's slot controlled and the DOJ has the leverage to get it done. [Edit: Not saying I support this theory or it's a good one, but it's just one that came to mind.]

[Edited 2013-06-28 07:17:58]
 
FlyPNS1
Posts: 5272
Joined: Wed Dec 01, 1999 7:12 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 2:17 pm

Quoting jfk777 (Reply 11):
IF AA decided to give up their ORD Hub and United had 70 % of ORD 's slots no onw would think twice about it.

ORD doesn't have slots. And I can guarantee you that if ORD did have slots and UA somehow got 70% of them, that the DOJ/DOT would care.

Remember, even UA/CO gave up all of UA's EWR slots to WN to help get the merger approved quickly because they knew EWR would be a problem otherwise.
 
jetbluefan1
Posts: 2869
Joined: Wed Dec 31, 2003 8:39 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 2:51 pm

Quoting IADCA (Reply 12):
There are only so many possible combinations of connecting itineraries on the East Coast, and only 9 viable domestic hub airports (JFK, LGA, EWR, PHL, BWI, IAD, DCA, CLT, ATL) and all are spoken for. This merger would give one airline hubs at 4 of the 9. We need to force them to divest a hub." DCA is picked for that because it's slot controlled and the DOJ has the leverage to get it done.

I think this is one of the arguments that others who will be vying for the slots (B6, WN, NK) will use.

Frankly, I do not see how one entity can own a vast majority of slots at the primary domestic airport in the most important capital on Earth. For the government to allow this would be a complete slap in the face to the anti-trust principles this company's capitalistic system is based on.

JetBluefan1
 
flyiguy
Posts: 892
Joined: Mon Feb 23, 2004 2:21 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 3:27 pm

Quoting capitalflyer (Reply 1):
The longer they fight this, the more slots they will have to give up. If they would have just come forward and offered to relinquish a dozen slots then all would be well. Now it will probably be more.

Exactly...UA/CO did this at EWR and gave up the 18 PMUA slots with no push back and all was fine. DP needs to stop arguing because in the end the DOJ will always win.

FLY
The opinions I post are of mine and mine alone, not of the airline I work for.
 
TWA85
Posts: 285
Joined: Tue Feb 14, 2012 10:06 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 3:34 pm

AA and US only overlap each other in two markets from DCA. Forcing AA and/or US to relinquish slots could in a round about way reduce competition as US and AA would most like withdraw from a lot of the non core major markets they already serve where the compete with other legacy carries and LCC's are not likely to replace them in those markets as they will most likely will expand in leisure markets from DCA.
 
User avatar
enilria
Posts: 6487
Joined: Fri Feb 22, 2008 7:15 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 3:45 pm

Quoting flyiguy (Reply 15):
DP needs to stop arguing because in the end the DOJ will always win.
Quoting TWA85 (Reply 16):
AA and US only overlap each other in two markets from DCA.

US/AA needs to give back slots...end of story. It's a restricted entry airport and US controls too much of it already. A government program (slots constraints) should not even exist with the effect of guaranteeing a private company has exclusive rights to slots which are not the airline's property, but are the property of the infrastructure which affords them...paid for with tax dollars and usage fees. This creeping monopolies in NYC and DCA are destructive to competition.
 
lhcvg
Posts: 1255
Joined: Mon May 25, 2009 2:53 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 3:56 pm

Quoting flyiguy (Reply 15):
Exactly...UA/CO did this at EWR and gave up the 18 PMUA slots with no push back and all was fine. DP needs to stop arguing because in the end the DOJ will always win.

And even if he DOES manage to eke out a win here, he won't win himself any favors or goodwill. The UA move at EWR was a masterstroke because it at least gave the appearance of them playing ball and being willing to make appropriate concessions (and that they get them to WN to boot, not just another legacy). It just strikes me as a bad strategy to make such a hard stand against any concessions if you're DP -- even if you offer up what we on here all see as token divestments, it would look better for them. Unless I am reading this wrong, the impression I get from DP so far is basically "we're keeping everything as we don't see any competitive issues".
 
Cubsrule
Posts: 11516
Joined: Sat May 15, 2004 12:13 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:01 pm

Quoting IADCA (Reply 12):
However, as far as I remember, those have come in the context of multi-market consumer products mergers. Here I'd be surprised if they did anything like that, but they legally could.

Wouldn't doing so require them to view the market as something more than DCA or Washington D.C., which they've not historically done in airline mergers?
I can't decide whether I miss the tulip or the bowling shoe more
 
IADCA
Posts: 1351
Joined: Mon Feb 26, 2007 12:24 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:02 pm

Quoting TWA85 (Reply 16):
AA and US only overlap each other in two markets from DCA. Forcing AA and/or US to relinquish slots could in a round about way reduce competition as US and AA would most like withdraw from a lot of the non core major markets they already serve where the compete with other legacy carries and LCC's are not likely to replace them in those markets as they will most likely will expand in leisure markets from DCA.

Well, the fact that they only overlap in two markets (BNA and RDU) shows that there's actually already a large problem, which is that US prefers to not even compete on routes to other carriers' hubs. That's a bit unusual; for example, think if DL just decided not to fly ATL-EWR just because EWR is a UA hub? US does that quite a bit. They don't fly from DCA to ORD, JFK, MIA, ATL, DTW, EWR, or MSP. That leaves many of those routes as monopolies or limited duopolies, which drives DCA O&D fares through the roof on many routes (and note that routes with LCC competition, like ATL, generally are lower-fare). I'd much prefer a flight to MSP over another to BGR. Redistributed slots in the past have generally been used for service to underserved O&D markets from DCA (or former monopolies). There's a definite balance to be had.

Quoting Cubsrule (Reply 19):
Wouldn't doing so require them to view the market as something more than DCA or Washington D.C., which they've not historically done in airline mergers?

Correct, but there were some hints at some shifts in this view in some of their comments on the DOT transatlantic JV immunity decisions. To be clear, I don't think this is a likely argument, but it would be legally possible.

[Edited 2013-06-28 09:05:22]
 
nwcoflyer
Posts: 677
Joined: Thu Jun 19, 2003 7:55 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:08 pm

Quoting IADCA (Reply 20):
They don't fly from DCA to ORD, JFK, MIA, ATL, DTW, EWR, or MSP.

US does fly DCA-MSP and DCA-DTW. We did fly DCA-ATL fo a while and cut it a couple years ago. Its not very competitive to fly DCA-ATL/DFW etc when you are running 3 daily and your competition has almost hourly service AND a low cost competitor (in ATL's case)
The New American is arriving.
 
apodino
Posts: 3030
Joined: Mon Apr 04, 2005 2:11 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:16 pm

Quoting nwcoflyer (Reply 21):
Quoting IADCA (Reply 20):
They don't fly from DCA to ORD, JFK, MIA, ATL, DTW, EWR, or MSP.

US does fly DCA-MSP and DCA-DTW. We did fly DCA-ATL fo a while and cut it a couple years ago. Its not very competitive to fly DCA-ATL/DFW etc when you are running 3 daily and your competition has almost hourly service AND a low cost competitor (in ATL's case)

JFK and EWR is kind of a bad argument too because there is hourly service to LGA, which is the same market. Also, ORD and MIA will be served post merger by the carrier. I actually wouldn't be surpised to see a combined AA try ATL from DCA, but with both WN and DL entrenched in the market, it could be tough.
 
superjeff
Posts: 707
Joined: Fri Feb 05, 2010 2:14 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:18 pm

Quoting enilria (Reply 17):
US/AA needs to give back slots...end of story. It's a restricted entry airport and US controls too much of it already. A government program (slots constraints) should not even exist with the effect of guaranteeing a private company has exclusive rights to slots which are not the airline's property, but are the property of the infrastructure which affords them...paid for with tax dollars and usage fees. This creeping monopolies in NYC and DCA are destructive to competition.

Except that US bought some of their slots in their trade with Delta for LGA slots, and, also, because AA/US is likely to provide better service to the area than any of the proposed beneficiaries of a slot divestiture: WN, NK, B6, etc.
 
IADCA
Posts: 1351
Joined: Mon Feb 26, 2007 12:24 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:21 pm

Quoting nwcoflyer (Reply 21):
US does fly DCA-MSP and DCA-DTW. We did fly DCA-ATL fo a while and cut it a couple years ago. Its not very competitive to fly DCA-ATL/DFW etc when you are running 3 daily and your competition has almost hourly service AND a low cost competitor (in ATL's case)

Sorry, you're right on DTW and MSP - forgot some of the regional flights. I agree on the 3x vs. the hourly service, and I'm aware of the LCC on ATL, which is why I mentioned it specifically. But the fact is the 3x service can work sometimes - in fact, MSP is a 3x daily - and I'd something I'd expect to see at a hub airport. It seems US has had some issues finding the right balance between O&D and connecting traffic at DCA, but without the numbers, it's hard to say why this stuff doesn't work.

Quoting apodino (Reply 22):
JFK and EWR is kind of a bad argument too because there is hourly service to LGA, which is the same market. Also, ORD and MIA will be served post merger by the carrier. I actually wouldn't be surpised to see a combined AA try ATL from DCA, but with both WN and DL entrenched in the market, it could be tough.

Depends who you ask on whether they're entirely the same market. (Also, not really an argument, just an observation on how the market functions.) I'd never fly into LGA when going to north Jersey, but then again the competitive discipline for UA there is also provided by the train. I'm aware of the multiple reasons these places aren't served, but it's just an oddball for a hub airport. But MIA and DFW are really quite serious issues from an antitrust perspective because you're merging the only incumbent carrier and the only real potential competitor.

[Edited 2013-06-28 09:27:11]
 
superjeff
Posts: 707
Joined: Fri Feb 05, 2010 2:14 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:24 pm

Quoting IADCA (Reply 20):
Well, the fact that they only overlap in two markets (BNA and RDU) shows that there's actually already a large problem, which is that US prefers to not even compete on routes to other carriers' hubs. That's a bit unusual; for example, think if DL just decided not to fly ATL-EWR just because EWR is a UA hub? US does that quite a bit. They don't fly from DCA to ORD, JFK, MIA, ATL, DTW, EWR, or MSP. That leaves many of those routes as monopolies or limited duopolies, which drives DCA O&D fares through the roof on many routes (and note that routes with LCC competition, like ATL, generally are lower-fare). I'd much prefer a flight to MSP over another to BGR. Redistributed slots in the past have generally been used for service to underserved O&D markets from DCA (or former monopolies). There's a definite balance to be had.

Except that that's the rationale behind deregulation. If you want to require competition in a particular market you have to regulate that market, which went bye-bye in 1978. US is free to use their airplanes where they want, and apparently they are flying to markets that support their effort. Washington Metro is actually 3 airports: BWI, DCA, and IAD. There is ample competition and AA/US is not a major player in either BWI or IAD.

This is making a big deal out of nothing.
 
IADCA
Posts: 1351
Joined: Mon Feb 26, 2007 12:24 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:32 pm

Quoting superjeff (Reply 25):
Washington Metro is actually 3 airports: BWI, DCA, and IAD. There is ample competition and AA/US is not a major player in either BWI or IAD.

This is making a big deal out of nothing.

I think most Washingtonians wouldn't agree on the level of competitive discipline provided by IAD and BWI, but that's ground that's been covered many times before. For me personally, it's quite low. And I'd point out that a slot-limited airport with a perimeter restriction where the feds make multiple yearly decisions on allocations of slots is hardly a model of a deregulated industry. If the conscious regulatory decision is to try to structure this as a 3-airport market with imperfect competition and each airport having a defined role, that's fine, but it's definitely a product of conscious regulatory action.
 
jfk777
Posts: 5863
Joined: Tue Aug 22, 2006 7:23 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:35 pm

Quoting FlyPNS1 (Reply 13):
ORD doesn't have slots. And I can guarantee you that if ORD did have slots and UA somehow got 70% of them, that the DOJ/DOT would care.

Remember, even UA/CO gave up all of UA's EWR slots to WN to help get the merger approved quickly because they knew EWR would be a problem otherwise.

How many flights does Southwest have at Newark ? 15 ? United can put up with 15 737 a day from SW.
 
FlyPNS1
Posts: 5272
Joined: Wed Dec 01, 1999 7:12 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:37 pm

Quoting superjeff (Reply 25):
This is making a big deal out of nothing.

Except that US will be forced to give up slots or likely the merger will be scrapped.
 
silentbob
Posts: 1540
Joined: Tue Aug 15, 2006 1:26 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:39 pm

Parker doesn't expect to keep all of the slots, he's just trying to keep as many as possible. It will be interesting to see how it all shakes out. My guess is that US will end up with 60-62% of the slots when everything is all said and done.
 
User avatar
OA412
Crew
Posts: 3779
Joined: Thu Dec 28, 2000 6:22 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 4:40 pm

Quoting IADCA (Reply 26):
I think most Washingtonians wouldn't agree on the level of competitive discipline provided by IAD and BWI, but that's ground that's been covered many times before.

   IAD just isn't competitive with DCA vis-a-vis domestic flying. When given the choice, why fly into IAD and deal with imperfect ground transportation into DC, when I can fly into DCA and arrive at my destination in no time via the Metro?
Hughes Airwest - Top Banana In The West
 
User avatar
enilria
Posts: 6487
Joined: Fri Feb 22, 2008 7:15 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 5:17 pm

Quoting superjeff (Reply 23):
Except that US bought some of their slots in their trade with Delta for LGA slots, and, also, because AA/US is likely to provide better service to the area than any of the proposed beneficiaries of a slot divestiture: WN, NK, B6, etc.

Is there any government document that says that an airline can own a slot? If there is I'd like to see it. If you want to pay for something that there is no technical ownership of, I'd file that under buyer beware.
 
FlyPNS1
Posts: 5272
Joined: Wed Dec 01, 1999 7:12 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 5:23 pm

Quoting jfk777 (Reply 27):
How many flights does Southwest have at Newark ? 15 ? United can put up with 15 737 a day from SW.

And US can survive giving up 12-20 flights at DCA to other carriers. It won't kill them. Most of those slots could be freed simply by getting rid of the overlap on BNA-DCA and RDU-DCA.
 
masseybrown
Posts: 4444
Joined: Wed Dec 11, 2002 2:40 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 5:36 pm

Quoting Cubsrule (Reply 9):
What legal basis (i.e. antitrust law basis) would permit DoJ or a court to force the divestiture of more slots than AA holds now?

A 40% share in city-pair markets has been defined as monopolistic under existing anti-trust laws; this could reasonably be extended to an airport market share. I believe US by itself holds a 40% share of DCA. The DoJ, however, has been much more restrained in acting against airlines than they could have (and maybe should have) been .

In other merger cases, the low-barrier-to-entry argument has been used to overcome the 40% market share limit on specific routes; slot-controlled airports, however, are a whole different issue.
 
IADCA
Posts: 1351
Joined: Mon Feb 26, 2007 12:24 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 6:00 pm

Quoting MasseyBrown (Reply 33):
A 40% share in city-pair markets has been defined as monopolistic under existing anti-trust laws; this could reasonably be extended to an airport market share. I believe US by itself holds a 40% share of DCA. The DoJ, however, has been much more restrained in acting against airlines than they could have (and maybe should have) been .

In other merger cases, the low-barrier-to-entry argument has been used to overcome the 40% market share limit on specific routes; slot-controlled airports, however, are a whole different issue.

I think he was asking very specifically about how (or if) DOJ could force a combined US-AA to divest more slots than were acquired in the merger. For example, say US has 60% now and AA has 8%. His question was if or how DOJ could force them to divest more than the 8% picked up in the merger.
 
Cubsrule
Posts: 11516
Joined: Sat May 15, 2004 12:13 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 6:21 pm

Quoting IADCA (Reply 34):
I think he was asking very specifically about how (or if) DOJ could force a combined US-AA to divest more slots than were acquired in the merger. For example, say US has 60% now and AA has 8%. His question was if or how DOJ could force them to divest more than the 8% picked up in the merger.

That is correct.
I can't decide whether I miss the tulip or the bowling shoe more
 
HPRamper
Posts: 4603
Joined: Sat May 14, 2005 4:22 am

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 6:56 pm

Quoting jetbluefan1 (Reply 14):
For the government to allow this would be a complete slap in the face to the anti-trust principles this company's capitalistic system is based on.

Not really. Letting the airlines do whatever they wanted would be true capitalism. Forcing US/AA to give up slots that both airlines came into the merger deal with would be anti-capitalist and in fact, leaning socialist.
 
masseybrown
Posts: 4444
Joined: Wed Dec 11, 2002 2:40 pm

RE: DOJ Taking US/AA Depositions Over DCA Slots

Fri Jun 28, 2013 6:57 pm

Quoting IADCA (Reply 34):
I think he was asking very specifically about how (or if) DOJ could force a combined US-AA to divest more slots than were acquired in the merger. For example, say US has 60% now and AA has 8%. His question was if or how DOJ could force them to divest more than the 8% picked up in the merger.

The DoJ could simply decide to enforce the 40% share on its own initiative, even independent of a merger. That, however, is extremely unlikely, as I think we all know. The precedents set in the DL/NW and UA/CO mergers, when the DoJ had the opportunity but failed to restrict industry concentration in important markets, cannot now be reversed in the courts.