Texas AG drops opposition to U.S. Air-American Airlines merger

“From the beginning, our focus has been on maintaining service to rural airports in Texas and protecting Texas jobs,” Abbott said in a statement. “Today’s agreement ensures that thousands of jobs will remain in Texas and that Texans traveling by air — especially those who fly in and out of rural cities across the state, including members of the military — will continue to benefit from daily flight service. The settlement secures common-sense concessions that are in the best interests of our great state.”

Consumer advocates had touted that fact that the attorney general of a staunchly conservative state where American is based had shared their concerns about the proposed merger.

The DOJ lawsuit argues that American and U.S. Airways have too much many similar destinations, which they said will lead to decrease competition for passengers and higher fares.

American Airlines and U.S. Airways have countered they have less than 10 identical nonstop routes, though opponents of their proposed merger also point to flights to the same destinations with layovers in different cities.

The companies also argue that other airlines, like Delta and Northwest airlines; United and Continental airlines; and Southwest Airlines and AirTran Airways, have been allowed to merge in recent years.

American CEO Tom Horton said Abbott’s support was a critical step toward his company similarly winning approval for its merger.

"I'm pleased we were able to find common ground and gain the carefully considered support of the Attorney General in our home state," Horton said in a statement.  "This is an important step forward for American Airlines, for Texas, and for our customers and people of both American and US Airways. Texas has long played a lead role in our company's history, and this agreement is assurance of our commitment to maintain and enhance the outstanding levels of service and connectivity that the new American will provide to the citizens of Texas."

For his part, Abbott said this week that he was now satisfied that the proposed American-U.S. Air merger would not affect the overall competitiveness of the American airline industry. 

“The settlement is good for American Airlines’ customers, the communities it serves and its employees,” he said. “Our negotiations confirmed that the airline will preserve competition in the marketplace, maintain important routes in Texas and protect jobs.”

Abbott said the airlines agreed in the settlement with Texas to continue operating a hub out of Dallas-Fort Worth International Airport.  The airlines also agreed to maintain a daily flight schedule to more than 20 airports in Texas, though many of the flights would be operated by regional carriers. 

The full settlement agreement can be read here.