Saturday, June 24, 2000

Lawmakers leery of pending air deal

They express worries about competition

The Associated Press and Bloomberg News

        WASHINGTON — In seven hearings over two weeks before four congressional committees, the proposed United Airlines-US Airways deal has prompted near-unanimous skepticism, if not outright opposition.

        Time after time, the lawmakers' own anecdotes of high prices, hampered travel plans and dwindling airline choices in many communities appeared to be a driving force behind their opinions.

        “Right now, there isn't much competition” in the airline industry, said Rep. Zoe Lofgren, who commutes twice a week between Washington and San Jose, Calif. “And I'm not seeing how this merger is going to make the competitive situation any better.”

        The head of United said Friday that if its merger with US Airways goes through, competition would increase because the company plans to expand its Charlotte, N.C., hub and challenge Delta Air Lines for supremacy in the Southeast.

        United chairman James E. Goodwin told the House Judiciary Committee that the $11.6 billion merger would strengthen United's minimal presence on north-south routes along the East Coast and on transcontinental flights across the southern tier of the United States, because U.S. Airways is strong in those areas.

        Although federal regulators, not Congress, must decide wheth er to approve or reject the merger, political sentiment can influence their decision.

        US Airways chairman Stephen Wolf told the committee that hub airports do not encourage anti-competitive practices, but instead foster competition from other airlines. He said that hub airports offer customers more choices and provide service to more cities than would be possible without the hub-and-spoke system.

        “Hub airports compete with other hub airports,” Mr. Wolf said.

        A different committee heard an entirely different view Thursday about the United-US Airways deal's effect.

        “Reasonably strong evidence” exists that the merger between United and US Airways would create a domino effect in the airline industry that could result in only three major U.S. carriers, said Albert Foer, president of the American Antitrust Institute.

        He told the Senate Commerce Committee that the question of future mergers and how that would affect competition should be central to the government's review of the United-US Airways deal.


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