Copyright 2000 eMediaMillWorks, Inc.
(f/k/a Federal
Document Clearing House, Inc.)
Federal Document Clearing House
Congressional Testimony
July 27, 2000, Thursday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 1254 words
COMMITTEE:
SENATE COMMERCE, SCIENCE AND TRANSPORTATION
HEADLINE: TESTIMONY ANTITRUST ISSUES IN AIRLINE
INDUSTRY
TESTIMONY-BY: JOHN MCCAIN , SENATOR
BODY:
JULY,27, 2000 STATEMENT OF SENATOR JOHN
McCAIN CHAIRMAN, SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION FULL
COMMITTEE HEARING ON ANTITRUST ISSUES IN THE AIRLINE INDUSTRY Today's hearing
will address the role that antitrust laws play in keeping the airline industry
competitive. We are fortunate to have two distinguished witnesses with us to
discuss these matters. Assistant Attorney General Joel Klein is considered an
activist in terms of antitrust enforcement. His Antitrust Division has tackled
many challenging and controversial cases in the last few years. Professor Alfred
Kahn is frequently referred to as the "father" of airline deregulation. Ms
efforts set in motion a dramatic change in the part that air transportation
plays in our country. He is also one of the most thoughtful and well-regarded
experts on the airline industry. I am grateful to both gentlemen for being here.
Welcome. The airline industry has reached a critical stage in its development.
More than twenty years have past since deregulation and the major airlines have
matured into relatively productive networks. For all their flaws in areas such
as customer service, the airlines have helped transform air travel from a
privilege for the few into a necessity for the many. It hasn't been easy, but
most U.S. airlines have become strong and efficient. Recent developments in the
industry raise questions about where the industry will go from here, and how it
will get there. Consolidation is one of the most pressing issues. If the
proposed United Airlines and US Airways merger is approved,
most everyone believes that there will be farther. mergers,
leading to three mega-carriers. I cannot think of any marketplace that works
better for consumers with fewer competitors. Apart from the ability of three
bigger carriers to wield significant market power, especially at hub airports,
new entry would probably become more difficult in a more concentrated industry.
As everyone is aware, Senator Gorton and I have introduced a Senate Resolution
expressing our strong reservations about the proposed merger of United
Airlines and US Airways. Through the deliberations of this Committee,
we have carefully analyzed the proposed merger, as well as its
long-term consumer effects. We have concluded that whatever air travelers stand
to gain from the merger is outweighed by what they stand to
lose. Although we felt compelled to make our views known, we are fully aware
that this issue is now in the hands of the Departments of Transportation and
Justice. For obvious reasons, Assistant Attorney General Klein cannot comment on
the particulars of the merger or other specific matters pending
before the Antitrust Division. In addition to consolidation concerns, other
important issues facing the industry include collaborations among the major
airlines, and predatory behavior on the part of individual carriers. Just last
week, the Committee held a hearing on how the Internet is having an impact on
the industry. Much of the attention focused on Orbitz, the Internet travel
agency formed by five major airlines. As a general matter, we want the airlines
to compete at all levels. When they work together on the sales of tickets, it
harkens back to the abuses of the computer reservation systems. But Orbitz may
inject competition in the channels of ticket distribution, where it has been
lacking. Predatory behavior is a troubling phenomenon that can be difficult to
get a hold of. At the risk of stealing some of his thunder, I note that
Professor Kahn has spoken out on predatory behavior by the major carriers. He
was quoted last year as saying, "If I had to choose between encouraging low-fare
entry like the kind that has benefited the public with low prices, and the
unencumbered ability of major airlines to respond to low-cost competition . . .
, I will pick the first every time." I tend to agree with him. Once again, I
welcome our witnesses. I look forward to continuing our dialogue on issues that
are crucial to the future of air transportation in the United States.
LOAD-DATE: August 9, 2000, Wednesday
