Alaska Air-Virgin America Consumer Antitrust Case Settles

On the heels of the Justice Department’s OK of the Alaska Air-Virgin America airline merger, a consumer antitrust lawsuit has been settled, according to federal court documents filed Wednesday.

Alaska’s $4 billion takeover of Virgin America will create the fifth largest airline in the U.S.

The terms for settlement of the lawsuit were not disclosed.

The lawsuit filed earlier this year in San Francisco federal court sought to block the merger arguing it would hurt passengers by eliminating Virgin America as a competitor that is “innovative, passenger friendly” and offered low-cost options.

Virgin is the only California-based airline, which began in 2007.  That was the year of a frenzy of airline mergers, the lawsuit argued, which then followed by increases in fees to passengers. In 2012, Delta, United, American and US Air charged charged more than $3.5 billion in baggage fees and more than $1 Billion in reservation change fees.

The four largest domestic airlines, Delta, United, Southwest and American control 84 percent of all passenger airline service in the U.S., according to the lawsuit.

But on Dec. 6, the U.S. Justice Department said that once Alaska Air reduces its codeshare agreement with American, which would reduce Alaska’s incentives to cooperate with American, according to the DOJ.

Once the modifications are made the acquisition of Virgin may be completed, according to the DOJ.

The consumer antitrust action in San Francisco was set for a trial on Dec. 12, but the settlement was announced Wednesday and the trial vacated.  Terms of the deal were kept under seal.

Case: Grace v. Alaska Air Group, No. 126-cv-5165

 

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