Copyright 2000 eMediaMillWorks, Inc.
(f/k/a Federal
Document Clearing House, Inc.)
Federal Document Clearing House
Congressional Testimony
June 13, 2000, Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 3054 words
HEADLINE:
TESTIMONY June 13, 2000 STEPHEN M. WOLF CHAIRMAN US AIRWAYS
GROUP, INC. HOUSE TRANSPORTATION AND INFRASTRUCTURE
UNITED-US AIRWAYS-MERGER
BODY:
June 13, 2000 Written Testimony by Stephen M. Wolf, Chairman, US
Airways Group, Inc. Presented to House Committee on Transportation and
Infrastructure Chairman Shuster, Mr. Oberstar, and Members of the Committee, on
behalf of the entire US Airways family, I appreciate the
opportunity to be here this afternoon. The merger of United and
US Airways creates, in the words of one major financial
analyst, the first airline of the 2Ist Century. Indeed, this event will be a
milestone in commercial aviation, joining the complementary systems and assets
of two veteran and successful carriers to create the nation's and world's most
efficient and comprehensive route network, much to the benefit of the customers
and communities we serve. I am fortunate to have been involved with this
industry for over 30 years and associated with the development of both
US Airways and United Airlines. From this perhaps unique
perspective, I would like to offer a few comments on the proposed
merger. Put simply, both organizations can take great pride in
this remarkable step - and both can be excited by what it means to the traveling
public and the communities we serve. The analyst is correct: this IS the first
airline of the 21't Century. Just as the great airlines that emerged from the
onset of deregulation - the Uniteds and Americans and Deltas and Northwests,
indeed, the US Airways - have brought the benefits of
affordable air travel to millions and millions of Americans, so will those
benefits be expanded evenfurtherinthe2l"Centuryevolutionofthissystem. And just
as the first era of deregulation spawned new and powerful forces such as
Southwest Airlines, so too can we expect to see a new competitive spirit emerge
in the coming decades as new opportunities arise. With this union, US
Airways has the opportunity to achieve our goal of building a truly
global carrier - not over many years, but in a single stroke. Without it, we
would face tremendous hurdles in striving to offer the kind of convenience and
worldwide service that our customers both deserve and expect in this competitive
era. For the US Airways family - our employees, our customers
and the communities we serve - we are obligated to do the right thing. And this
is it: the right step, with the right partner at the right time. What makes this
so right? First, the combination is a superb fit that enhances competition and
benefits customers. This is an agreement that works on many levels and is one in
which the consumer benefits of the combined carriers will be substantially
greater than their individual parts. Where there was the potential for overlap
between the two carriers - primarily in the Washington area - we have eliminated
that potential conflict by divestiture. In contrast to many
mergers whose benefits are often measured in the "synergies" of
eliminating duplicative jobs and functions, this is a merger
whose benefits truly flow from the growth that will occur. United's extensive
east-west system and western presence nicely complement US
Airways' comprehensive north-south routes and eastern presence.
Historically, both US Airways and United are known for their
high level of service and for the professionalism of their employees. Our
employee unions are similar. And we each have, in large part, the same type of
aircraft - all major considerations. For the thousands of dedicated and loyal
men and women in our workforce, this agreement promises a bright future. For
nearly a decade, the employees of US Airways have faced periods
of uncertainty about the future of the company. Now they will be part of the
most exciting development in commercial aviation history, and they will see
their career opportunities, and their security, increase. United
Airlines agreed that, given the complementary networks and benefits of
the combined carrier, they could absorb these employees without the need for
layoffs and furloughs. Indeed, given the strong projections in leisure and
business travel, the new partnership actually expects to employ more people
rather than fewer in the foreseeable future. For millions of our customers, this
merger will deliver immediate benefits, while simultaneously
building a foundation for future opportunities. This step is both pro-consumer
and pro- competitive. In today's global economy, more people are flying to more
places than ever before; and this merger is a natural step to
meet that demand. Partnered with United, we will be able to provide our
customers with an unparalleled array of on-line destinations. Our passengers
will gain new non-stop, same-carrier service to 117 U.S. cities and 28
international destinations. Our loyal and frequent customers, many of whom live
in small and medium-size cities throughout the eastern United States, will gain
instant access to over 500 additional destinations in every comer of the globe
through the Star Alliance. This means that millions of our customers will be
linked to a system that will directly carry them to commercial centers around
the globe. On the combined US Airways and United system, for
instance, travelers will be able to fly from such places as Frankfort, Kentucky
to Frankfurt, Germany, and from Pittsburgh, Pennsylvania to Silicon Valley with
never-before- available ease and convenience. After the merger,
more passengers will enjoy the convenience of one airline, one baggage check-in
and one frequent flyer program. For the US Airways family of
communities, this agreement will bring home significant benefits. We will bring
the world to the doorsteps of hundreds of communities by providing easier access
to international destinations. Many of the mid-size cities we serve - such as
Charleston, Rochester, and Tampa - will gain seamless access to international
destinations. Our hub in Charlotte, for example, will gain new non-stop service
to several West Coast destinations, and one-stop service to new destinations
such as Hawaii, Australia, New Zealand, Korea and Taiwan, as well as to Caracas,
Rio de Janeiro, Sao Paulo, Buenos Aires and Santiago. In addition, dozens of
communities in the eastern United States will have enhanced commercial and
tourism opportunities with new, convenient access to numerous Asian
destinations. I have spent a professional lifetime in this industry. Over the
past three decades, my career has taken me from American Airlines to Pan
American World Airways to Continental, Republic, Flying Tigers, United and
finally US Airways and I bring all of my aviation experience to
bear on my testimony here today. For these thirty years, I have watched the era
of deregulation, the expansion of regional service and the impact of
globalization create a revolution in the airline industry. The combination of
these two carriers is both the most positive response to these new market forces
and a proactive step into the next generation of flight. But the impact of this
merger transcends the immediate; it is a major milestone in
aviation history. By helping to generate new competition, it will establish a
new era in the industry. It will further and enhance America's leadership in the
global aviation market. As we move into the second century of flight, the
international marketplace is undergoing a radical transformation. The world has
never been more interconnected than it is today. The combination of technology
and free-market principles has led to the free-flow of goods, services and
information across national borders. Travelers from all four comers of the
country need to be able to travel throughout the country and throughout the
world quickly and efficiently. By combining the strengths of these two
companies, we will have our first truly nationwide network that is linked to the
world. With this partnership, we can further facilitate the flow of
international commerce. This is especially exciting for many of the eastern
communities that have been served by US Airways for as many as
50 years or more. These communities will not be left behind; they will become
full-scale participants in the new global economy. The legal framework is also
evolving to adapt to the changing marketplace. Fragmented protectionist
bilateral agreements are rapidly being replaced by "open skies" and liberalized
regimes on a bilateral and even multilateral basis. Eventually, multilateral
regimes will emerge. The United States now has taken the lead in opening the
international skies. Now the market place is responding to the opportunity
created through U. S. government bipartisan leadership. When the U.S.
deregulated the domestic airline industry more than 20 years ago, we freed the
industry to respond more efficiently to the ever-evolving needs of customers. At
the same time, we enabled U.S. airlines to demonstrate to the world the benefits
that come from a deregulated marketplace. During the past two decades, consumers
have enjoyed improved efficiencies, services and price options. Through this
merger, U.S. airlines once again can demonstrate the consumer
benefits of a more open marketplace - this time on a global scale. At the same
time, this agreement will completely fulfill the promise of domestic
deregulation by enabling more American air travelers to more fully enjoy a
global network of seamless service and the benefits of open competition. But it
is not just domestic consumer demand to which we must respond in order to
thrive. We must remain competitive, in a rapidly changing international
environment. Multi-national carriers in Europe and Asia are responding to the
new marketplace opportunities. The greater efficiencies resulting from this
merger will improve services and bring down prices, thus
enhancing global competitiveness. The new merged airline is positioned to
compete head to head with the leading carriers of Europe and Asia, as these
airlines are undergoing a similar transformation - although at a slower pace.
Allowing U. S. customers to respond to the new global market, we can bolster the
world leadership of our industry. This merger is an important
step in doing so. For our nation to continue to lead this industry on an
international scale, we must also have the vision to see beyond the historical
constraints of a fragmented aviation system. We must recognize that an open,
global marketplace is inevitable and the aviation industry will be no exception.
Now in the rapidly changing legal and economic environment of the world, our
industry must continually evolve to meet consumer demand. This union provides
the ideal free-market response to this rising consumer demand for international
air travel. It reflects the needs of an increasingly interconnected global
marketplace. Such an airline is well-positioned to extend the benefits of
deregulation to the emerging global marketplace. The benefits of the union will
be substantial domestically as well as internationally. A merger of US
Airways and United will have clear and dramatic positive effects on
competition in domestic markets. Both the economy and consumers will reap the
benefits of this enhanced competition and improved service. For the US
Airways family - from our employees to the communities we serve - this
partnership will create a host of new opportunities. Our customers, too, will
enjoy substantial benefits, including easier-than-ever access to the world. For
all involved, the benefits that will arise with this new airline are
significant. Thank you for the opportunity to share my perspective with you.
LOAD-DATE: June 16, 2000, Friday
