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|Kevin Mitchell||December 7th 2016|
The Business Travel Coalition (BTC) applauded the U.S. Department of Justice (DOJ) in filing a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed merger of Alaska Airways (“Alaska”) and Virgin America (Virgin”). Preserving competition and the incentive to contest new markets is paramount in a domestic industry where four airlines control some eighty percent of seats – down from eleven airlines in recent years.
DOJ offered a proposed settlement wherein Alaska would need to discontinue its codeshare arrangement with American Airlines (“American”) on routes where Virgin competes directly with American and also where Alaska would likely initiate new service in competition with American post merger. DOJ would allow continued codesharing on routes that could offer some consumer benefits, e.g., to destinations one of the airlines would not likely serve on its own in the near term.
Likewise, DOJ advised that any sale or lease of gates or slots by Alaska that were acquired by Virgin as part of the settlement of DOJ’s lawsuit challenging the 2013 merger of American and US Airways would require DOJ pre-approval. This would ensure that American does not regain control of those assets. Airports where those assets are housed are Dallas Love Field Airport, Washington Reagan National Airport and New York’s LaGuardia Airport.
Virgin America and Alaska Airways are both innovative, quality airlines that provide the competitive rivalry necessary to discipline prices for consumers and keep pressure on airlines to improve customer service levels on many routes Start-up airline entry is very difficult today and remedies for the many competition and consumer problems are few. As such, the preservation of existing competition is critically important."