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Federal Document Clearing House
Congressional Testimony
June 14, 2000, Wednesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 1534 words
HEADLINE:
TESTIMONY June 14, 2000 HENRY J. HYDE CHAIRMAN HOUSE JUDICIARY
AIRLINE HUBS; UNITED USAIR MERGER
BODY:
STATEMENT
OF CHAIRMAN HENRY J. HYDE BEFORE THE COMMITTEE ON THE JUDICIARY AT THE OVERSIGHT
HEARING ON THE STATE OF COMPETITION IN THE AIRLINE INDUSTRY JUNE 14, 2000 Today,
the Committee holds the first of two oversight hearings on "The State of
Competition in the Airline Industry." The airlines' fare differentials and
uneven quality of service indicate the lack of competition in this industry. No
one knows that better than Members of Congress who spend a lot of time on
airplanes. But an Associated Press story dated June 3, 2000 illustrates my
point. It sets out how one airline treated its passengers during a weather
delay: About 200 passengers on a United Airlines flight bound
for Washington, D.C. sat on the runway at O'Hare International Airport for more
than eight hours Friday. Flight 1806 was scheduled to take off at 1:44 p.m. The
wheels finally left the tarmac at 9:53 p.m. .... The plane was forced to return
to the gate twice, once to refuel and once to replace crew members who had been
on duty too long under Federal Aviation Administration rules. There were no
meals available to the passengers during the delay, but a United spokesman said
the flight crew passed out granola bars stored on the plane for unexpected
delays. .... Some passengers were allowed to make brief trips into the terminal
when the plane was called back, but most remained onboard during the delay, the
United spokesman said. Now, despite the disagreements that I have had with the
airlines, I don't yet expect them to control the weather. But eight hours
crowded into an airplane with nothing but a granola bar seems excessive to say
the least. More importantly, it demonstrates a lack of competition. If this
business were truly competitive, does anyone think that any airline would allow
their customers to suffer through this kind of ordeal? Of course not. And if
these customers had lots of other choices, they would never put up with this
kind of treatment. So, what is going on out there? On May 21, I announced this
hearing in a press conference in Chicago. The Suburban O'Hare Commission, a
group of local governments in my district, called the press conference to
announce the release of a report entitled "If You Build It, We Won't Come." The
title refers to a January 17, 1995 letter sent to then Illinois Governor Edgar
by the heads of a number of airlines, including the Big Seven, indicating that
if a third airport were built in Chicago, these airlines would not use it. Isn't
that odd? One would think that if there were vigorous competition in the
industry, the airlines would be clamoring for more airport capacity. More
importantly, that signature piece of evidence falls into a broader pattern
tending to show the lack of competition among the airlines in one another's
hubs. My good friends, Village President John Geils of Bensenville, Illinois,
and Joe Karaganis, the attorney for the Commission, will provide us with further
detail on that later. That is the topic that I had hoped to address in this
hearing. Three days later, United Airlines announced that it
was going to acquire US Airways. Needless to say, that is not
something that strikes me as injecting increased competition into the industry
notwithstanding the proposed spinoff of DC Air. The Justice Department is
already suing to block Northwest's proposed acquisition of a controlling stake
in Continental for similar reasons. So, I felt it was necessary to add the
merger as a topic in this hearing. Let me just say that, based
on what I have heard so far, the competitive implications of this
merger are very troubling, and I believe that it deserves
rigorous scrutiny from the Department of Justice's Antitrust Division. I also
want to ensure that United's employees, many of whom reside in my district, are
treated fairly. Those are our two main topics today. However, I want Members to
know that they are not limited to those topics, and they may fairly ask
questions about any subject within the general realm of airline competition. In
that vein, let me also say a word about predatory pricing. Many new entrant
airlines complain that established airlines try to drive them out of business by
using predatory pricing. The Department of Justice is suing American Airlines
over allegations that it uses this practice, and the Department of
Transportation has long been considering enforcement guidelines in this area. I
do not want to comment on the specific merits of either of those matters, but I
do want to applaud both agencies for attempting to address this problem. I also
want to say a word about our witness list. It is largely made up of critics of
the major airlines and the United-US Airways merger. Several of
the major airlines were invited to participate today, but declined to do so
because they preferred to attend a Senate hearing. In order to accommodate them
and balance the presentation, we will have a second hearing on Friday, June 23,
at which they will be able to present their views. So, where do I find myself on
all of this? The airline industry today for the most part is not vigorously
competitive. Too many routes are dominated by one carrier. Until that changes,
consumers will have little choice. We are only going to get more competition if
we build more capacity and that means more airports. In my home town, the
airlines have long resisted the building of a third airport. But they cannot
forever forestall the future. A new airport is coming in Chicago, and they will
come in other places across the country. When that happens, we will see more
competition, and no consumer will sit on the runway for eight hours. I look
forward to that day, and I look forward to the testimony of our witnesses today
and next week. With that, I will turn to Mr. Conyers for his opening statement.
LOAD-DATE: June 26, 2000, Monday
