Virgin America Inc won permission on Monday to file a brief with the court hearing the Justice Department's bid to stop a big airline merger, giving it an opportunity to argue for lower barriers to enter the U.S. market.
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The government filed a lawsuit in August arguing that US Airways (NYSE:LCC) and American Airlines (TICKER:AAMRQ) should be forced to scrap a proposed merger that would create the world's largest airline.
Virgin, noting that it was the most recent airline to enter the U.S. market, said in a filing that the proposed deal between U.S. Airways and American would further solidify already considerable impediments to new entrants.
"Virgin America will explain how this loss of competition could be mitigated by the defendants' agreeing to provide current and future LCCs (low-cost carriers) access to the networks behind the defendants' hubs," the company said.
Virgin said that it was prompted to enter the fight by remarks last week by Attorney General Eric Holder regarding a possible settlement.
It argued that any settlement focused on Reagan National Airport near Washington, D.C., New York's LaGuardia Airport and other key, busy airports would be inadequate to address competitive harms.
In recent years, San Francisco-based Virgin America has complained about the difficulty of acquiring takeoff and landing slots and gate access at airports such as Newark Liberty in New Jersey and New York's John F. Kennedy.
It began flights at Chicago O'Hare Airport in 2011 after a years-long effort to gain access there.
Southwest Airlines Co (NYSE:LUV) has also asked for and won permission to file a brief. It is expected to argue that American and US Airways should be forced to sell slots at Reagan National and LaGuardia -- slots Southwest has said it would like to acquire.
A third carrier, JetBlue Airways (NASDAQ:JBLU), has also made clear its desire to acquire more slots at Reagan National and called for the combined American-US Airways to shed slots there.
Since the Justice Department filed its suit in August, American and US Airways have mounted a ferocious lobbying campaign and garnered support from unions, Democratic lawmakers and even big-city mayors in three of the six states that oppose the merger.
Chicago Mayor Rahm Emanuel, formerly President Barack Obama's chief of staff, was one of seven mayors from hub cities to write Attorney General Eric Holder to complain about what the mayors called an "ill-conceived lawsuit."
The Association of Professional Flight Attendants, the Allied Pilots Association, US Airline Pilots Association and the Transport Workers Union have also lined up against the government.
US Airways had no comment on Virgin's challenge while the Justice Department and American Airlines could not immediately be reached for comment.
Shares in AMR Corp., parent of American Airlines, closed down 1 percent and those in US Airways closed up 0.25 percent on Monday.
The case at the U.S. District Court for the District of Columbia is No. 1:13-cv-12346
(Reporting by Diane Bartz and Karen Jacobs, editing by Ros Krasny; Editing by Gary Hill and Leslie Adler)