San Francisco-based attorney, Joseph Alioto, has filed a lawsuit to stop the merger between Alaska Airlines (AS, Seattle Tacoma International) and Virgin America (San Francisco).
According to court papers seen by the Real Deal aviation blog, the case has been filed on behalf of more than forty individuals who collectively claim the newly merged entity would reduce competition and be detrimental to both companies.
"The “threatened loss or damage” to the Plaintiffs and to the public at-large by the potential elimination of Virgin America as a competitor, the most innovative, passenger friendly, premium low cost and unique airline in the industry, is substantial and foreboding," the complainants stated.
Alioto claimed the disappearance of Virgin America would further exacerbate the growing threat of monopolies in the US's domestic aviation market. At present, 84% of the US's airline services lie in the hands of just four carriers - American Airlines (AA, Dallas/Fort Worth), Delta Air Lines (DL, Atlanta Hartsfield Jackson), Southwest Airlines (WN, Dallas Love Field), and United Airlines (UA, Chicago O'Hare) - he said.
Alioto also pointed to other negative effects the Alaska/Virgin merger would have including reduced service to smaller markets, workforce layoffs, and higher fares.
Announced in April of this year, the merger between Alaska Airlines and Virgin America is valued at USD4 billion. All outstanding US regulatory issues are expected to be resolved this year in time for the merger to close on January 1, 2017.
In a statement, Alaska Airlines said that given Alioto's history, it had anticipated such a case. In any event, it still expects to make its year-end closure deadline.
Alioto has filed several similar suits in recent years including an attempt to sue United, American, and Delta Airlines for alleged price-fixing. he also tried to block the American Airlines/US Airways (Phoenix Sky Harbor) merger, again citing anti-competition concerns.
