I've held off on commenting on the AMR judgment because I wanted to find the ruling and at least skim it, and read major sections, first. I also avoided the thread called "AMR beats the loser airlines" because it was clear that the poster simply wanted to mouth off because he didn't "like" low-fare carriers.
In short, the ruling appears sound. DOJ simply did not demonstrate that American violated the Sherman Antitrust Act's standards for predatory behavior. DOJ's case is appallingly sloppy in places--they attempted to create a new doctrine of "reputation" where a major could be shown to be guilty of predatory behavior simply because they carried over 60 percent of the traffic on the route!
The ruling is extremely thorough, and I plan to read it in detail. Aviation Week has a link to it; go to the commercial aviation section, go to "more comm av stories" and get "the AMR wins summary judgment" story. The link is there. The ruling in USA v. AMR offers detailed history on low-fare competition in the DFW market, and the sections I've read are just plain fascinating, on their face.
The bottom line seems to be that the carriers which entered the DFW market simply did not have good business plans for the routes in question. AA did not undercut fares *at any time* on the routes in question (DFW to COS, MCT, ICT and TPA/ LDB) and only incurred losses according to the average variable cost standard (AVC) which covers 98 percent of the company's costs.
AMR did dump capacity, though, as the ruling indicates. There does need to be development on the law in that area; the existing standards make capacity dumping nearly impossible to demonstrate. Judge Marten cites case law that says that dominant companies can't be prevented from adding capacity to meet increased demand, because that would tend to freeze their prices at high levels.
This is true to some extent, but it seems to me that there needs to be some kind of standard developed for capacity dumping. Predatory pricing and capacity dumping go hand in glove, and both need objective, emprically verifiable standards of measurement. Marten holds, and I'll need to read more before agreeing for sure, that gov't experts Berry and Hovenkamp did not demonstrate them.
The main implication of Marten's ruling, it seems to me, is that antitrust scholars are going to need to do very careful research on how to demonstrate predatory pricing and capacity dumping in court. Even on a skim-and-examine reading, it seemed to me that DOJ failed badly to demonstrate predatory pricing on the four routes in question. And the whole notion of "predatory repuation" by market share (which DOJ alleged in 48 additional markets from DFW!) is outright frightening. That's market engineering out of a Chinese Five-Year Plan.
Summary judgment was appropriate in this case. But there's no question that many medium-and-small cities pay unjustly high airfares, caused by Big Air's anticompetitive cost structures and excessively high profit expectations. The medium and small cities of America deserve much better from DOJ than to make sloppy cases that overreach. And they need more well-managed low-fare carriers with sound business plans who can hold their own against the Big 6/ Oligopoly.
Need a new airline paint scheme? Better call Saul! (Bass that is)