U.S. Government Says AA-US Air Merger May Be Illegal on These 1,044 Routes

There are 1,044 city pairs where the American-US Airways merger may be illegal, according to the antitrust lawsuit filed by the U.S. government today.

The lawsuit (embedded below) pits the United States, Arizona, D.C., Florida, Pennsylvania, Tennessee, Texas, and Virginia against US Airways and AMR Corp.

The government alleges a merger would increase concentration and decrease competition, leading to higher airfares, fewer discounts, and poor service.

American and US Airways in the past countered such allegations about a reduction of competition by arguing that their networks only overlap on 12 nonstop routes.

But, the lawsuit goes much further than critics' previous arguments by pinpointing competition problems on 1,044 routes.

As the states explain in the lawsuit:

The more concentrated a market, and the more a transaction would increase concentration in a market, the more likely it is that a transaction would result in a meaningful reduction in competition.

Market concentration is usually measured by the Herfindahl-Hirschman Index (HHI).

Markets, or city pairs, where HHI exceeds 2,500 points are considered highly concentrated and could be considered illegal. The merger is also considered to have a significant impact on competitiveness in markets where HHI increases more than 200 points post-merger.

City pairs are only listed once below, but each route includes flights at all airports within each metropolitan area. For example, routes to Dallas include all flights at Dallas-Fort Worth International Airport and Love Field.

Ronald Reagan Airport would be one of the airports most impacted by a merger. The combined airline would have a monopoly there, with a hold on 63 percent of nonstop routes served out of the airport, the lawsuit states.

The lawsuit says the merger would increase competition by 1,493 points (a 200-point increase causes alarm) to a post-merger HHI of 4,959 at Ronald Reagan.

Below are the 1,044 city pairs where the American-US Air merger would increase HHI by more than 200 points, leading to post-merger HHI above 2,500 points on each route.

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