U.S. Seeks to Block Airline Merger Dealing an unexpected blow to a yearlong effort to create the world's biggest airline, the Justice Department said the merger between the two airlines would substantially reduce competition, increase air fares and cut service. After approving a series of mergers between the nation's airlines in recent years, the Justice Department's decision came as a surprise to both carriers, who had expressed confidence the deal would go through with only a few changes. Antitrust regulators had not challenged an airline merger since the planned tie-up between United Airlines and US Airways in 2001. Since then, Delta Air Lines merged with Northwest Airlines, United merged with Continental, and Southwest merged with AirTran. In recent years, however, consumer groups and some economists have warned that the wave of consolidation in the airline sector had contributed to higher airfares and less choice for consumers. "Today's action proves our determination to fight for the best interests of consumers by ensuring robust competition in the marketplace," said Eric H. Holder Jr., the United States attorney general. The civil antitrust lawsuit was filed in the United States District Court for the District of Columbia to challenge the planned deal. The Justice Department said the vast majority of domestic airline routes were already highly concentrated. A merger of American and US Airways, it said, would result in four airlines controlling more than 80 percent of the United States market for commercial air travel. It also found that the planned merger would have created a dominant carrier at Ronald Reagan National Airport near Washington, where it would control 69 percent of the takeoff and landing slots and have a monopoly on 63 percent of the nonstop routes served from there. According to the complaint, "By further reducing the number of legacy airlines and aligning the economic incentives of those that remain, the merger of US Airways and American would make it easier for the remaining airlines to cooperate, rather than compete, on price and service." The two airlines said they would defend their merger plan. We believe that the D.O.J. is wrong in its assessment of our merger. Integrating the complementary networks of American and US Airways to benefit passengers is the motivation for bringing these airlines together," they said in a statement. Blocking this pro-competitive merger will deny customers access to a broader airline network that gives them more choices. The announcement is a significant setback for American's plans to exit bankruptcy. American had racked up losses of about $12 billion since 2001 and filed for bankruptcy two years ago to reduce it labor costs and restructure it business. It was the last major airline to file for bankruptcy. While American sought to complete its bankruptcy as a stand-alone carrier, US Airways persuaded its rival's union groups as well as creditors to back a merger while still under court protection. In February, the two carriers agreed to the deal valued at $11 billion. The merger was expected to bolster American's domestic footprint, strengthen its presence in the Northeast and give it a bigger network to attract business travelers and corporate accounts. Under the deal, US Airways shareholders would own 28 percent of the combined airline, while American Airlines shareholders, creditors, labor unions and employees would own 72 percent. US Airways stock was down 8 percent in trading after the announcement was made. The participating attorneys general are from Texas and Arizona, where American and US Airways are based, as well as Florida, the District of Columbia, Pennsylvania, Tennessee and Virginia. The suit "seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate." The Government Accountability Office said in June that the planned merger would reduce competition in a far larger number of airports than earlier airline mergers, including the one that created the nation's current leader, United-Continental. The report found that 1,665 routes between cities would lose one competitor as a result of the merger, affecting more than 53 million passengers. A new competitor would be created in 210 routes, affecting 17.5 million passengers. The report added, however, that the great majority of those markets still had "effective competitors." The Justice Department's lawsuit against the merger of American Airlines and USAirways by DealBook