Topic of the Week: Is DOJ Using Delay Tactics?

The next step in the American/US Airways merger trial has taken place with both sides requesting preferred court dates. The airlines have requested the trial start November 12, 91 days after the complaint was filed. DOJ, however, has requested 180 days with it starting in February.

In the motion filed with the courts, American and US Airways show that of the 16 merger challenges coming from DOJ or the FTC since 2000, 14 have gone to trial in less than 90 days. The other two were in 102 and 106 days respectively. Considering that DOJ has already had 16 months to dive into the merger, more than most, this smells of delay tactics to me.

This was brought up in the comments before. You don’t necessarily have to have a good case if you can just delay the thing the death. I’d say that appears to be DOJ’s strategy. What do you think?

Now the judge decides when to start the trial. We should know the schedule within a week. Once it goes to trial, it’s only expected to take 10 days.

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46 Comments on "Topic of the Week: Is DOJ Using Delay Tactics?"

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George
Guest

Agree with you-DOJ looks to be doing the delay game. It’s now in the Judge’s court-if he agrees to the date DOJ wants, I’ll bet when the date gets near DOJ will ask for a further delay. As a few others have said, this merger is dead.

TomSFO
Guest

Can American survive… if the DOJ tries to delay the case forever or the merger doesn’t go through?

WildcatJDF
Guest

Yes. AA was already on track to emerge out of bankruptcy with or without the merger.

alex
Guest

Nope. The only bankruptcy exit plan was the merger. They do not have a “plan B”.

Goober
Guest

When does the decision on trial date get made?

MeanMeosh
Guest

There is a hearing scheduled for 9:30 A.M. EDT on August 30th. A decision on the trial date is expected then, according to this morning’s Dallas Morning News blog post.

Goober
Guest

When do we find out which date will be used?

MeanMeosh
Guest

Interesting tidbit from today’s Airline Biz Blog:

http://aviationblog.dallasnews.com/2013/08/antitrust-judge-in-american-airlines-us-airways-case-has-a-long-trial-scheduled-to-begin-in-mid-january.html/

Seems the judge might shoot down the DOJ’s request for a delay, but maybe that’s just wishful thinking.

glen
Guest

You are right on with your “delay it to death” assertion!!! If the DOJ is successful in getting the judge to agree to a March court date, It’s Over without ever having to see the court room. Many have said the DOJs case is not strong…. well it may not have to be. The merger will likely not survive a delay that long.

Jobe
Guest

The merger was announced in Feb. 2013. Why would you think the DOJ would start looking into the merger whiel it was still just talk?

MeanMeosh
Guest
“Delay and hinder” is a common tactic used by the government, though there’s a little more to the strategy than just “delay so they’ll go away”. Part of my day job over the years has involved fighting the State Comptroller over franchise tax assessments. It has long been rumored that if you take a position on a return that the Comptroller just doesn’t like, regardless of the merits, they will disallow it using some questionable rationale, and immediately issue a notice demanding back taxes, interest, and penalties. When you protest, you get a series of letters saying “we’re looking into… Read more »
Foxthomasb
Member

It’s about time they tried to stop these mergers. Airline mergers are good for airline execs, bad for competition, bad for employees ultimately and horrible for consumers. American employees think this is their savior…well so did the TWA employees and so did the US employees at PIT …and the Northwest employees in Memphis…..and the Midwest employees in Milwaukee… the first lame excuse the new AA can come up with and the pink slips will be flying. Ask the Continenetal employees in Houston after Southwest just announces flights to Cancun… a smokescreen for layoffs they wanted to do anyways.

Nick Barnard
Member

TWA wasn’t a merger, it was an asset sale. It is likely TWA would’ve gone under.

US/AW most likely saved US as it was on its second trip through bankruptcy, and may or may not have survived.

NW/DL – looks like the company as a whole is doing well. Memphis is getting the service it can support, it was previously overserved, so yeah, pain happens.

Midwest – This airline struggled for a long time, and should’ve jumped in with Airtran. The cookie got saved… for a little while.

miss2mr
Member

I don’t trust this DOJ on anything!

kozmaterry
Member

This merger needs to be stopped. That is the role- looking out for consumers. If Alaska can make it on their own (and proud of it) AA and US can also. The Justice Department is doing the correct thing at this point.

As a student of anti-trust law they have an excellent case and will prevail. Remember that cranky has a management airline bias and is no student of anti trust law

ROBBY
Guest

I prefer the two remain / become healthy, competitive, stand-alone carriers.
Alaska is a perfect example.
Does everyone really want to see this merger?
Phoenix residents might wanna be speaking up.

Consumer Mike
Guest
Jeff, my friend, I choose to believe the DOJ BEFORE I believe Doug Parker, et al, on this matter. As I have stated previously, Parker has too much to lose if this attempted mega merger does not go through, so he will promise the moon. The consumers will not come out gaining if the merger happens. I have no problem if the DOJ saves money and runs out the clock on this episode. It looks like a good strategy to me. The people who cheer for this merger never underline the PROBABILITY of lost jobs, less or no service to… Read more »
John
Guest
Consumer Mike, I am guessing you clearly have not followed the airline industry very closely. Your example does not make sense. So by AA/US not merging they will answer the phones quicker? You would get the same response from them today, unmerged. Service in the airline industry has gone down, everyone will agree. Stopping the merger will do nothing to prevent this. The airlines are not selling widgets. US/AA merging will make the industry stronger by adding a stronger competitor. Will jobs be lost, absolutely. Does that mean it is bad? I don’t think so. All companies get leaner to… Read more »
Bill
Guest
I’m sorry, Consumer Mike, but that comment is just completely idiotic. Mergers have nothing to do with how long it takes you to get through to the airline. Every airline, or rather every single corporation in the world has that problem. Try getting elite status, it’ll help. And the thing you seem to really not be understanding is that without the merger we’ll have less competition. Right now you have 2 big carriers and a bunch of more medium-sized ones. This way we’ll have 3 big carriers again. And can you honestly say you’re not impressed by American’s new onboard… Read more »
Consumer Mike
Guest
Thank you Bill and John for reading my opinion and I am glad it got you to thinking. First, let me say that the example I gave was to illustrate that some promises made to grease the skids for mergers have the same value as political campaign promises to entice your vote from your hands. I am an Elite level passenger on American and NEVER have a problem calling in for any reason. That could chane to a negative if the merger happens. Todays experience only served to remind me why I seldom fly UNITED or DELTA. AND, I can… Read more »
Bill
Guest
Consumer Mike — thanks for your response. I apologize for poorly phrasing my stance against consumer advocates. I think you’re right that consumers need people to tell them the other side of the story, but often times, the so-called “advocates” tell them lies about the horribleness that will ensue if corporations merge. You may be very different from that stereotype I unfortunately possess, and if you are, I am sorry. I’m all for consumer advocates, as long as they act responsibly (just like I’m for unions or congressmen if they act responsibly!). And if you look at what happens for… Read more »
MeanMeosh
Guest
Consumer Mike, I have to disagree with your assertion that AA is capable of surviving on its own as a separate entity. Short-term, sure, but long-term, I find that questionable. First, AA’s stand-alone bankruptcy plan basically involved increasing capacity by something like 20% and starting fare wars all over the map to increase market share. How is that going to succeed long-term, or be better for consumers? Sure, you might see some temporary fare cuts in markets where war is declared, but eventually, they’re going to go back up when the next economic downturn wreaks havoc on the weakest carrier,… Read more »
MeanMeosh
Guest
I also feel compelled to respond to another point that just sticks in my craw every time I see it. You say that “you are right on that with the added charges to base airline fares (fees, services, civilized seating, etc.) it has priced many travelers out of the air.” I hear that from guys like you, Chris Elliott, and Charlie Leocha all the time, but how exactly do you propose to fix that “problem”? For one, I have to question that “many travelers have been priced out of the air”, because even if you add in fees, airfares are… Read more »
David M
Guest

Every merger has its glitches, but using United is a bad example as they’ve been pretty well known as a basket case ever since the UA/CO merger went through. DL/NW and WN/FL have both been a lot smoother than UA/CO. Plus, Parker and his team just did the HP/US merger not that long ago, so they have their own experiences to use to try and avoid the same issues.

Nick Barnard
Member
Consumer Mike – how has the service on DL changed? I’ven’t flown them recently, but the general impression I get is that it has improved markedly. UA/CO merger has made service has been a mess, but DL/NW has improved service. Its a 50/50 what’ll happen to service with US/AA, although my money is more like DL/NW than UA/CO. I’m sure the US/AA management team has looked over at those two for examples. MeanMeosh – How do you see US/AA labor going to become a mess? I have thought through this, and AA’s labor unions are going to control the resulting… Read more »
Consumer Mike
Guest
OK Guys, It appears a have a list of questions and comments about my opinions, so I will try to answer them the best I can: I am on travel right now and for the first time in a LONG time I flew UA. I did not know what to expect after the merger. This time I flew SNA (Orange County) to Houston (Int) then on to MCO (Orlando). The United ground staff was good. Both flights were FULL. At Houston the guy next to me must have been a football player. Big and long. His legs could not fit… Read more »
glen
Guest

If this merger fails, we will be left with the mega airlines Delta and United. American will likely shrink into a nitch airline and airways will be only a small player. Remembering my econ classes, this would essentially be a duopoly. That’s extremely anti competitive. Seems to me that having another meaningful competitor would solve the problem. Airway and AA can’t do that on their own but together the could. Seems to me this merger might be a good deal for the consumer after all.

mandel.jerry1
Member

With all the massive info DOJ has demanded, US and AA would have had to be brain dead to have been “surprised”.

glen
Guest

I agree. The only thing I might add is that if this merger fails, united and delta will not have any other meaningful competetion, thus fares will rise more. We need that third mega airline to make this a healthy market.

ROBBY
Guest

I think the third mega airline is
Alaska, SWA, Virgin America, JetBlue, Frontier……

mark
Guest

Tom, regarding mergers. AA-TWA was not a merger. It was a purchase while TWA was in it’s in third bankruptcy preceeding. Third time in 10 years, 1992, 1998, 2001.

DesertGhost
Guest

Do I think the DOJ is stalling? You bet I do.

glen
Guest
It appears the doj wrote their complaint so that it will take a very long time to litigate. They have already made public comments about how they view the trial as being lengthy. Their strategy all along has been “delay it till it dies”. Interesting that the DOJ is tasked with upholding the law and they appear to be on the wrong side of the law on this issue. They have created a complaint not to “win” in court but to delay to the point the merger dies on it’s own. Thus winning anyway… Doesn’t seem right, does it. Wonder… Read more »
danwriter1
Member
Logically, the merger makes sense as a counterweight to what would inevitably be a UA/DL duopoly. In reality, I suspect we’ll just be trading that duopoly for a cartel. Fares will increase and service will decline (in both senses of that word). The merger becomes an opportunity to extend the pattern of the last 35 years, when corporate focus shifted from customer satisfaction to shareholder value. Short term, I’m betting that DOJ succeeds and consequently am bailing on Exect Plat for the first time in 13 years, taking a status match from DL and looking at spending down 1.3 million… Read more »
eds
Guest
Judge Kollar-Kotelly will eventually decide this one way or another. But let’s face it, there is no way a she issues a ruling before the end of the year. She is a very thorough Judge. She was appointed by Clinton in 1997 and she oversaw the settlement phase of US v Microsoft. The US/AA team is going to have to provide greater weight of evidence that the merger will not decrease competitiveness and cost consumers more $$. It will not enough to say that “the study that the GAO did has issues”, they are going to have to convince the… Read more »
dan powers
Guest

most professors in economics will agree only 3 major airlines will survive…AA already knows it needs to get 20% bigger…USair will not survive long term…their employee salaries are frozen to late 1980’s levels…once they bounce back to normal…Usair will be dismantled or sold off to AA…the DOJ is just spinning their wheels….a merger is inevitable

WildcatJDF
Guest
The only thing a merger between these two companies (both of which have admitted they do not need each other to survive) is going to cause is a downgrade in service for those of us who travel week after week. I used to be a huge Delta fan until they merged with Northwest, I had to jump ship because as a top tier Delta frequent flyer I lost nearly all benefits of flying with them. All of the sudden it was impossible to get an upgrade, international flights had to be booked in a certain fare class to upgrade, and… Read more »
Glen
Guest

So Wildcatjdf, you think that having two mega airlines (merger dies) versus three mega airlines (merger survives) will provide for more competition??? Last I checked, Econ types would tell us that two like competitors would be anticompetitive however three would improve competitiveness. Wondering what your reasoning is? My view is that UAL and DAL will have us by the “short hairs” if this merger fails……

Wildcatjdf
Guest
Glen I believe if the merger dies that competitiveness will remain about the same as it is now. I am not sure how often you fly, but I fly on average 120+ flights a year, out of which American gladly upgrades me to First class about 95% of the time. I fly less miles, less flights than what Delta requires for the same treatment, and as I said in my post my peers who fly Delta who fly more than I do only get the benefit of flying First Class about 60% of the time. For those of us who… Read more »
Consumer Mike
Guest
Wildcat, I agree with your comments and observations. Although I no longer fly as mucfh as you do, I fly often. Your comparison of the FF programs of AA and Delta is what I also find. AA AADVANTAGE FF program is much better than the SKYMILES of Delta. In fact I will say that there is no comparison between the two. I have found time and again that using SKYMILES is almost impossible on many overseas destinations – even with their partner airlines. At times it is also getting difficult to use AADVANTAGE miles, but overall, more available. Same domestically.… Read more »
glen
Guest
Wildcat…. You are making the assumption that American would stay roughly the same size if the merger fails. Unfortunately, you won’t find many airline analysts that would agree with you. Most project that American will shrink to roughly 50% of their current size. If that’s the case we have a huge problem. A perfect little duopoly created by the DOJ not fighting the UA/CA and DL/NW mergers. Now the DOJ has a chance to redeem itself by allowing the very merger that would at least partially fix the economic duopoly they allowed. Here’s the bottom line: There is NO airline… Read more »
qmwolfe
Member

I really liked the part where USAA quoted the DOJ saying “We don’t file lawsuits unless we’re prepared vigorously to defend them, and that’s what we’re doing right now.”

If that’s the case and they are ready to defend, why try and wait until February.

cahilldot
Member

It gets ugly when the government (DOJ or other branch) gets involved look at the busload of college students taken to the Martin-Zimmerman trial they like to stir it up

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