The Clinton Herald, Clinton, Iowa

AP story section

August 14, 2013

Gov't uses executives' own words against them

NEW YORK — In making its case against an American Airlines-US Airways merger, the government relies heavily on an unusual source of evidence: the airlines’ own executives.

Throughout the 56-page lawsuit filed Tuesday, Department of Justice lawyers quote internal emails, investor presentations and public comments by the two airlines’ top executives noting how past mergers have allowed the industry to raise fares and given passengers no choice but to put up with ever-increasing fees for checking a bag or changing flights.

The suit recalls how US Airways President Scott Kirby noted in 2011 that industry consolidation had paved the way for the airlines to push through three airfare hikes that year. The next year, speaking at an industry conference, Kirby noted that it’s “impossible to overstate the benefit” of mergers in giving airlines the ability to impose new fees.

Lawyers noted some hypocrisy in how the executives view mergers. They talk about how much money they are making because of consolidation. At the same time, they claim that one more big combination will lower fares through “unspecified or unverified ‘synergies.’”

All of that calls into question the executives’ sincerity, the government says.

“By making claims about the benefits that are at odds with their prior statements on the likely effects of this merger,” the government says American and US Airways executives are “saying what they believe needs to be said to pass antitrust scrutiny.”

Mergers hurt fliers in several ways, the government says.

With fewer choices, consumers can’t protest added fees or higher prices. That means one airline often quickly follows the other in raising prices or charging new fees.

For example, when American announced a charge for a first checked bag on May 21, 2008, United and US Airways introduced their own luggage fees just three weeks later.

“Similarly, over a period of just two weeks this spring, all four legacy airlines increased their ticket change fee for domestic travel from $150 to $200,” the suit notes.

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