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Search Terms: United Airlines AND U.S. Airways AND Merger, House or Senate or Joint

Document 76 of 110.

June 14, 2000, Wednesday

SECTION: PREPARED TESTIMONY

LENGTH: 664 words

HEADLINE: PREPARED STATEMENT OF SEN. PATRICK LEAHY

BEFORE THE SENATE JUDICIARY COMMITTEE ANTITRUST SUBCOMMITTEE

SUBJECT - ON THE UNITED/US AIRWAYS MERGER

BODY:
Mr. Chairman, thank you for calling this hearing on airline competition. There seems to be a megamerger in a different industry almost every week.

Current economic forces are driving rampant consolidation across-the- board. And to the surprise of no one, the airline industry is on the bandwagon. But consolidation in this industry deserves special attention. Air carriers are an essential part of the national transportation network and for rural communities they are a critical element for economic viability. The airline industry also heavily relies upon an infrastructure paid for by passengers, local communities and the federal government. Every significant increase in concentration in this industry must be carefully examined in terms of competition, accessibility and, of course, airfares.

We are here this morning to consider the proposed merger of United Airlines and US Airways. Both are fine companies whose CEOs are highly respected in the airline industry. The companies argue that economic forces require them to merge. They also argue that they are a good fit except for one city which happens to be the nation's capital.

However, this merger has important implications in other communities - at the other "end of the line." While US Airways and United have proposed to resolve concerns in the Washington hub market, I have serious concerns about the effect of the merger on Burlington, Vermont. Even with the spin off of DC Air, United Airlines will control 74 percent of the market share in and out of Burlington.

It reminds me of that Millionaire show. At the very beginning you have three lifelines. We!!, in Vermont we have three or four lifelines out of town and with this merger, we are taking away one of them. As Regis Philbin would tell you, when you take away a lifeline, you are in trouble.

My gut and years of experience tell me that this merger would send us in the wrong direction. Also, I am sick and tired of the fact that Vermonters have to drive to other states just to get reasonable air fares.

Just look at the charts. From the Washington area, you can get to cities in states bordering Vermont for $88 round-trip, just by calling one week in advance. To fly from Burlington, and back, it would cost $735. Why should a Vermonter have to travel to New Hampshire or Connecticut or New York, just to get an affordable flight?

My second chart demonstrates how much market share United, merged with US Air, will end up with in Burlington, even taking into account DC Air. ln Burlington, we have actually seen a gradual increase in the number of flights and a gradual lowering of prices. The airlines have been moving in the right direction there. In the fall, we will have jetBlue flying in from Kennedy airport to introduce more competition in the market. These small steps to get more flights and more options to Burlington could be cancelled out by a giant !esp in the opposite direction. If it costs $735 to fly from Burlington, round trip, how could it possibly cost any less if you take one of the airlines away?

I need a sound answer to that question as do J.J. Hamilton, the Director of the Burlington Airport, and Joe McNeil, the city attorney in Burlington, who are here today.

United and US Airways want to spin off a new airline, DC Air, that will fly out of National Airport. Robert Johnson is a great businessman and I wish him the best in this new endeavor. However, DC Air will find that leasing is expensive and I understand that the new airline fleet will rely heavily on commuter and regional jets, which might limit the ability of this airline to become a low-cost carrier.

Frankly for Burlington, Vermont, and other "end point" destinations in the Northeast such as Syracuse and Albany, the spin-off of DC Air is not an answer to solving the market dominance that United will have in our communities.

Mr. Chairman, I will have a number of questions for all the witnesses for the record.

END

LOAD-DATE: June 16, 2000

Document 76 of 110.


Search Terms: United Airlines AND U.S. Airways AND Merger, House or Senate or Joint
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