The unexpected challenge by the United States Department of Justice to the proposed merger of American Airlines and US Airways on August 13th marks an abrupt change of policy after a decade during which regulators (mostly) favoured consolidation in a chronically loss-making industry. Airlines in America started racking up losses 20 years ago and the government blocked several merger plans, notably the takeover of US Airways by United Airlines in 2000-01. It was also hostile to a proposed deal between Delta Air Lines and US Airways in 2006, which never actually took off. But since then regulators have allowed the mergers of United and Continental, Delta and Northwest, US Airways and American West and the takeover of Air Tran by Southwest, a budget airline champion. Since de-regulation more than 30 years ago American carriers have either been in dire financial straits or only briefly in profit, and attacked on all sides for gouging passengers with higher fares. Opposition to consolidation was often strong on Capitol Hill because senators and congressmen feared for their political lives if routes to their home towns were cut and their voters had to change planes rather than fly directly where they wanted. Americans depend so much on network and budget airlines for domestic as well as foreign travel that they moan about them the way Britons complain about privatised railways and expensive train prices.

This time the federal lawsuit has been brought on behalf of six states (plus the District of Columbia) where American or US Airways operate hubs. The thrust of the case is based on the merger’s effect on ticket prices and various additional charges that airlines have introduced to increase revenues. The DoJ suit mentions the likely loss of US Airways’ low fares, known as Advantage Fares, which undercut those of American, Delta and United on one-stop trips and which have prompted US Airways’ competitors to reduce their prices. The DoJ has been scrutinising the merger since January, a month before it was announced publicly. Last week the European Commission nodded the deal through after a minor concession on slots at London’s Heathrow. But the DoJ said the merger would take consolidation too far, leaving four airlines controlling over 80% of the American market.

Doug Parker, the chief executive of US Airways, still hopes the deal can be completed before the end of the year. If it is not, American will struggle longer to emerge from Chapter 11 bankruptcy, as it would have to assemble and seek court approval for a new rescue plan. The existing one was relatively generous to creditors and shareholders, leaving the latter with a stake in the merged carrier. If the courts uphold the DoJ’s view, some observers think it will have the effect of intensifying the dominant position of United and Delta, leading to more losses and later pressure for more mergers—an unintended consequence of the DoJ’s stance.