Abbott drops Texas challenge to airline merger - KTRE.com | Lufkin and Nacogdoches, Texas

Abbott drops Texas challenge to airline merger

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(Source: CBS 5 News) (Source: CBS 5 News)
(Source: CBS 5 News) (Source: CBS 5 News)
GRAPEVINE, TX (CBS5/AP) -

The Texas attorney general says the state has reached a settlement in its challenge to the proposed merger of American Airlines and US Airways.

Attorney General Greg Abbott had led Texas into the lawsuit with the U.S. Justice Department and five other states in August. He cited expectations that consolidation would lead to higher fares and fees.

At a news conference Tuesday at Dallas-Fort Worth International Airport, however, Abbott said the carriers have agreed to maintain present levels of service in Texas and to keep the Texas headquarters.

Fort Worth, Texas-based American Airlines is a major employer in the state, and Abbott is seeking the Republican nomination for governor.

The Justice Department's antitrust trial over the merger is still scheduled for Nov. 25.

CBS 5 News obtained a statement from Arizona Attorney General Tom Horne, who said:

"We remain convinced that the airline merger between U.S. Airways and American Airlines is harmful to competition, and to Arizonans. This merger would inevitably result in higher fares and lesser service as more routes would be monopolized by just one carrier.

"The law of supply and demand is an unchangeable law of nature, like the law of gravity. When there are more suppliers, prices go down and service goes up as they compete for business. As the number of airline carriers has decreased in recent years, we've all seen fares go up and new fees imposed for baggage, desirable seats, etc. Our complaint quotes one of the airline presidents as reporting that consolidation (mergers that reduce the number of airlines) has enabled the airlines to raise prices.

"Less competition means fewer choices, diminished service, and higher prices. It is a law of nature. Arizona will continue the fight to promote competition in order to produce more service and reasonable prices for the people of Arizona. The trial is set for November 25."

Roger Holmin, AFA President at US Airways, said:

"Today's move by the Texas Attorney General recognizes what constituents in the state and across the nation have been saying: the US Airways/American merger is right for our country and it is right for US Airways and American Airlines workers.

"We are grateful for the support of Texas State Senator Wendy Davis who has continued to fight for Flight Attendants and other employees through this process. Additionally, we are thankful for the backing of several key members of the Texas congressional delegation as well as prominent mayors across the state of Texas for continuing to support a merger that provides the opportunity for good jobs.

"A US Airways/American merger would simply put the new American on par with other airlines, creating real competition in the process and real opportunities for workers. Communities served by the merged airline will gain access to greater service across a massive network of routes. Without a strong competitor like the merged US Airways and American, current mega-carriers will only expand their market dominance.

"In this lawsuit, DOJ risks destroying the only merger that has a chance of competing against carriers large and small in order to protect consumers. AFA will continue to push back against any strategy that leaves our American and American Eagle colleagues in limbo, languishing in bankruptcy.

"This combination is the first merger that includes the key role of employees. It signals job security and contract improvement opportunities for the combined Flight Attendant workforce. This provides a positive outlook for airline workers for the first time in over a decade."

Copyright 2013 Associated Press. All rights reserved.  CBS 5 (KPHO Broadcasting Corporation) contributed to this report.

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