When it was announced earlier in the year that US Airways Group Inc. and American Airlines would merge, it appeared that the world's largest airline – by a very large margin – would soon be taking a stranglehold over the industry. However, the U.S. Department of Justice raised a red flag, as such a deal would give this one airline an unprecedented – and arguably unfair – number of landing spots at airports throughout the U.S. that would, in theory, give the company a monopoly over the skies.
However, on Tuesday, November 12, it was announced that in order for the two airlines to win U.S. antitrust approval for the proposed merger, they would have to reduce their presence at a number of key airports throughout the country. This paves the way for smaller airlines to increase their competitiveness and create more equality throughout the industry.
"This agreement has the potential to shift the landscape of the airline industry. By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this settlement ensures airline passengers will see more competition on nonstop and connecting routes," U.S. Attorney General Eric Holder told the press after the announcement.
Aside from giving up landing spaces at Reagan National Airport outside of Washington, D.C., and New York's LaGuardia Airport – the two locations long thought to be central to the merger being struck – competing low-cost carriers would also be given more access to airports in Boston, Chicago, Dallas, Los Angeles and Miami.
While this is good news for smaller airlines, it remains to be seen whether or not US Airways and American investors will benefit from the new terms of the merger. If you stand to potentially lose money under such an agreement, look into wealth preservation to protect your long term investments.