Customers File Lawsuit to Block Airline Merger
Jennifer Billock September 09, 2016
A lawsuit has been filed to block the sale of Virgin America to Alaska Airlines.
On Wednesday, September 7, 42 plaintiffs filed a lawsuit that would block Alaska Airlines from buying Virgin America. The merger, which is expected to close in this year’s fourth quarter, has been in process since April after a bidding war with JetBlue. But the consumers filing the lawsuit don’t think this merger is a good idea.
Antitrust attorneys Joseph M. Alioto, Lawrence Papale (San Francisco), Gil Messina (New Jersey), and Theodor Schwartz (St. Louis), represent the consumers in the lawsuit. Mr. Alioto said in a statement that “the airline industry is a critical part of the social, economic and political fabric of our country. It has been corrupted by a trend of mega-mergers resulting in a series of abuses of passengers by charging them excessive fees while robbing them of comfort and conveniences. In the face of that was the introduction of Virgin America which brought innovation, imagination, frequent flights, special services, flight amenities, low fares and unprecedented service. If there is any vitality left with the antitrust laws and the principles of competition, the elimination of Virgin American will not be tolerated.”
The lawsuit itself outlines several main issues:
- A reduction in number of airlines servicing Hawaii, Western states and the East coast, resulting in higher fees and fares for travelers.
- The founder of Virgin America himself, Richard Branson, was against the merger.
- Airline mega-mergers have wreaked havoc on the air travel industry. According to the lawsuit’s research of a 2013 study, since 2007, scheduled domestic capacity in the 29 largest hubs has been reduced by 9 percent; in the 35 medium hubs, scheduled domestic capacity has been reduced by 26 percent; and in the 70 small hubs, scheduled domestic capacity has been reduced by 18 percent. The remaining flights have become more crowded.
- The existing big four airlines control 84 percent of customer traffic and continue to hike up fees, and will likely continue to do so.
[Photo: Ted S. Warren/AP]
As usual people are overlooking the real story Virgin out itself up for sale this was not a "hostile takeover" and at the end of the day in true free market Alaska was the highest bidder. And happened to have the best balance sheet and management to make this happen. So all the "would da could da's " out there remember the truth Virgin began this process because they knew that they could not survive going it alone especially when one looks around the world at the "Virgin" franchise is fading, witness Australia. I for one am happy to see this,
Progrowth, I doubt VA really flies to all those places, because VA is the code for Virgin Atlantic. VX is ithe code for Virgin America.
VA also fly to New York, Ft. Lauderdale, Orlando, Austin, Dallas, Boston, Chicago, Washington DC, Cancun, as well as many West Coast locations (including Mexico) and Hawaii.
Simple, Alaska and Virgin America mostly represent a single geographical section (Western US, including Hawaii) of the US market, whether most of the other mergers had more disperse constituencies (that would also be the case on a Virgin America / JetBlue merger...). Therefore the region's base of travelers have more reason to make a stronger stand.
It doesn't matter, over time these mergers have proved to lower competition, increase fares, offer less rewards, provide worse service, and unconscionable fees that continue to increase as the industry consolidates. For most travelers the airline industry is an essential service to get them cross country, and VA will also lose the reputation it achieved with superior everything. If these attorneys canvassed VA flyers (elevate members) I guarantee the vast majority are against this merger.