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US sues to block United, Delta slots deal at New Jersey airport

This Feb 21, 2013 file photo shows a United Airlines jet as it takes off from Fort Lauderdale-Hollywood International Airport in Ft. Lauderdale, Florida.

[WASHINGTON] The US government filed an antitrust lawsuit Tuesday seeking to block United Airlines's proposed acquisition of more slots at Newark Liberty airport in New Jersey, where it already dominates flights.

The Department of Justice alleges that United's planned purchase of 24 takeoff and landing slots at the airport from Delta Air Lines would further squelch competition, making consumers more likely to face higher fares and fewer flight choices.

United already controls 73 per cent of the total 1,233 slots in one of the key air transport hubs serving the greater New York City area.

"A slot is essentially a license to compete at Newark," Assistant Attorney General Bill Baer, of the Justice Department's Antitrust Division, said in a statement.

"United already holds most of them, and as a result, competition at Newark is in critically short supply. United is already extracting a 'Newark premium,'" he said.

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According to the Justice Department, airfares at Newark are among the highest in the country while United's service there ranks among the worst. About 35 million passengers fly into and out of the Newark airport every year.

The department said United holds more than 10 times more slots at Newark than its nearest competitor.

The lawsuit alleges that United's proposed acquisition would give the airline control of 75 per cent of the Newark slots market, dwarfing the second-largest carrier, American Airlines, which controls just under 6.0 per cent, violating the antitrust Sherman Act by unreasonably restraining competition.

The lawsuit also charges United and Delta, the seller of the slots, with violating the antitrust law by entering into an agreement that restrains trade.

United Airlines said it would "vigorously defend" its plan to acquire the slots from Delta.

"With three major airports, the New York/Newark area is the most competitive air transportation market in the country," said United spokesman Rahsaan Johnson in an emailed statement to AFP.

"We firmly believe this transaction benefits our customers and the region by enabling us to enhance service at our Newark hub and manage congestion at the airport." In mid-June, United announced the launch of premium transcontinental services serving Los Angeles and San Francisco from the Newark airport, where it has invested more than US$2 billion to build its gateway.

At the time, United, owned by United Continental Holdings, also announced two deals with Delta: one for Delta to acquire United's slots at Kennedy International Airport in New York and the other for United to get Delta's slots in Newark. Both deals are subject to regulatory approval.

The Justice Department's lawsuit, filed in a US government court in Newark, only addresses the Newark transaction.

Shares in United plunged sharply after the department's announcement, falling as low as US$59.03, but pared losses to 0.1 per cent at US$60.08 in afternoon trade. Delta dropped 0.4 per cent to US$50.41.


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