November 13th, 2013
09:21 AM ET

U.S. Air and American Airlines Reach Deal With Justice to Allow Merger

The Justice Department has reached a settlement with American Airlines and US Airways that requires the airlines to sell facilities at seven airports in order to complete their planned merger.

The deal announced Tuesday allows low-cost airlines to increase their presence at many of the nation's largest airports.

CNNi Business Correspondent Richard Quest explains it in depth. (SEE VIDEO BELOW)

Under the agreement, American and US Airways will sell to low-cost carriers 104 slots at Washington's Reagan National, 34 slots at New York's LaGuardia, and rights to gates at Boston's Logan, Chicago's O'Hare, Dallas' Love Field, Los Angeles and Miami airports.

In August, the Justice Department filed an antitrust suit against the airlines, arguing that the combination would reduce choices for customers by giving the combined carrier a stranglehold at certain major airports. At Reagan National, for instance, the two airlines would have controlled 69% of the take-off and landing slots.

"This agreement has the potential to shift the landscape of the airline industry," said Attorney General Eric Holder. "By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country."

The court is likely to approve the deal, reports CNN's Rene Marsh. But fliers will not see changes for many months. Other than the  cosmetic changes to come, the integration of the two airlines' computer systems could be a challenge.

Experts say you should be fine if you already have travel booked on either airline because merging the systems will take time, and frequent flyer miles are safe.

With one less major airline, however, royalty programs could become less generous, Marsh says. "Obviously that would be because of lack of competition. But they could start requiring more miles for a flight."

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