The Department of Justice has settled their lawsuit blocking the merger between American Airlines and US Airways.
This is a fast turnaround from earlier this year, when the regulatory body announced that they were suing to block the impending merger.
The settlement forces the combined airline to give up slots at key airports around the country, addressing the key two arguments against the merger: decreased competition would increase fares in certain markets and consolidation would threaten access to regular air service for some underserved mid-tier airports.
The airlines are required to sell 52 slot pairs at Washington's Reagan, 17 slot pairs at LaGuardia, and two gates at Boston's Logan, Chicago's O'Hare, Dallas Love Field, LAX, and Miami. This is about 15% of the combined airlines' gates at Reagan and 7% of the total at LaGuardia.
This will result in 44 fewer daily departures from Reagan, and 12 fewer departures daily from Logan. There will be an increase in presence for low-cost carriers from each of those airports, who historically have benefited from the forced divestiture of gates during large airline mergers.
The DoJ filed the settlement papers at the US District Court in the District of Columbia, which means that the trial scheduled for November 25th will be avoided.
American, as part of the settlement, has also agreed to continue operating its hubs in Charlotte, New York's JFK, Los Angeles, Miami, Chicago O'Hare, Philadelphia and Phoenix. The combined company has pledged to continue daily service from each hub for five years, offering service to each of the suing states: Arizona, Florida, Pennsylvania, Michigan, Tennessee and Virginia.
Attorney General Eric Holder said about the settlement:
"This agreement has the potential to shift the landscape of the airline industry. By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this settlement ensures airline passengers will see more competition on non-stop and connecting routes throughout the country."
Other airlines are welcoming the DoJ settlement. Delta, for their part, released this statement: " Delta looks forward to the opportunity to acquire slots that will be divested under the agreement, particularly at Washington-Reagan National Airport."
The merger is now expected to close in December, with a newly organized schedule coming in 2014 that will be the first glimpse into just how the world's largest airline will be deployed in destinations around the world.