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National Airport Is Always an Issue When US Airways Wants to Merge

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CHARLOTTE ( TheStreet) -- Once again, the potential for concentration at Washington Reagan National Airport is a chief concern in a US Airways' merger effort, and once again the airline has come up with an ingenious argument against antitrust actions.

In its 2000 effort to merge with United , US Airways proposed spinning off the National Airport operation to a well-connected African-American entrepreneur, Bob Johnson. That merger failed because United, put off by the high price it negotiated, lost interest and began to lobby against the deal it had made.

This year's effort to merge with American , by contrast, has support from American and seems likely to succeed. On Friday, 99% of US Airways shareholders approved it at what was likely the carrier's final annual meeting. CEO Doug Parker reiterated at the meeting the carrier's argument that giving up slots at National would mean reducing service to small cities.

US Airways operates a hub at National, enabling it to serve small cities because it offers connections. Divested slots would go to carriers likely to serve bigger cities already served from National. The case seems compelling and has backing from more than 100 members of Congress who opposed divestiture in a letter.

Thirteen years ago, the case for anti-competitive dominance was far more realistic because the proposed merger would have brought together US Airways, which dominates National, with United, which dominates a second area airport, Dulles International.

Larry Nagin, who in 2000 was US Airways corporate attorney as well as the right-hand-man to CEO Stephen Wolf, had a penchant for politics. Nagin thought it would be difficult for regulators to reject spinning off the principal carrier at Washington's close-in airport to a successful minority businessman. He hoped for approval in 2000, before the Clinton administration left office.

At the time, Johnson was a US Airways director as well as the owner of entertainment company BET Holdings. In an August 2000 interview with The Charlotte Observer , Johnson recounted what happened as he first learned he might enter the airline business. "When Steve Wolf first approached me, I said, `Steve, does it make money?' and he said, `It makes money,' and I said, `OK, I'll do it,'" Johnson said.

Johnson quickly called Hugh McColl, chairman of Charlotte-based Bank of America . "I said, `I've got a chance to buy an airline and I need some money.'" Johnson said. "He said, `Does it make money, Bob?' and I said, `Yes, it makes money.' He said, `I will get my A team on it.'"

The planned airline was first called Potomac Air, later changed to DC Air. Johnson said it would be built along the Southwest model, with all flights point-to-point from National, rather than the hub-and-spoke model.