Copyright 2000 The Atlanta Constitution
The Atlanta
Journal and Constitution
June 24, 2000, Saturday, Home Edition
SECTION: News; Pg. 1A
LENGTH: 908 words
HEADLINE:
United plots Delta challenge;
If merger goes through, airline will parlay
Charlotte hub into Hartsfield rival.
BYLINE: Rob
O'Dell, Cox News Service
SOURCE: AJC
BODY:
Washington --- United Airlines told Congress
on Friday it will expand its Charlotte hub if its merger with US Airways goes
through, challenging Delta Air Lines for air supremacy in the Southeast.
"Delta, with its hub in Atlanta, is the largest airline in the
Southeast, and it has a strong presence there," United Chairman James Goodwin
told the House Judiciary Committee. "But we plan to expand our newly acquired
hub in Charlotte and directly compete with Delta along routes in the South."
Delta spokesman John Kennedy said the Atlanta-based airline would take
any such challenge in stride. "All of this stuff is years away," he said. "The
airline industry is extremely competitive, and Delta Air Lines welcomes
competition in all of its markets."
Goodwin said 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 US Airways is strong in those areas.
During a
typical week early this summer, Charlotte had 4,469 departures, less than half
of the 9,252 at Atlanta's Hartsfield International, according to Tom Stoklosa of
OAG, a travel information provider. Yet Charlotte's numbers topped those at
Miami (4,302) and Tampa (2,856).
"The merger will allow United to
directly challenge Delta's presence in the Southeast," Goodwin told members of
Congress looking into the effect of mergers on airline competition. "It also
makes it more economical for cross- country flights, and we plan to expand our
routes with new nonstop service from Charlotte to Austin, San Antonio and
Portland, Oregon, as well as additional nonstop flights to Denver, Seattle and
San Francisco."
The congressional hearing explored the level of
competition at hub airports and the proposed United-US Airways merger in
particular. Friday's was the last of seven sessions over two weeks on the
planned merger, which has prompted skepticism and some outright opposition.
The next step will be for the Justice Department to rule on whether the
merger violates antitrust law.
On Friday, several House members,
concerned about a decline in airline service in their districts, pressed airline
executives on whether the merger would benefit consumers.
"Right now,
there isn't much competition," said Rep. Zoe Lofgren (D-Calif.). "I'm not seeing
how this merger is going to make that competition situation any better."
"I have long been concerned about airline competition at hub airports,"
said Rep. Henry Hyde (R-Ill.), chairman of the Judiciary Committee.
"I
was particularly impressed by the testimony at last week's hearing from AirTran.
AirTran is anxious to compete in a number of markets, but it cannot get
sufficient access to airports, which is similar to complaints that we have heard
in the past from other low-cost carriers," Hyde said.
Orlando-based
AirTran is Atlanta's No. 2 carrier.
"I understand that not everyone sees
it as I do," said United's Goodwin. " But we welcome the scrutiny . . . because
we are convinced that those who are reviewing this merger will conclude as we
have."
Steven Wolf, chairman of US Airways, told the committee that hub
airports do not encourage anti-competitive practices, but instead 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," Wolf said. "We are competing with Delta in the Southeast by providing
our Charlotte hub with a stronger platform to help it grow and compete with
Atlanta."
Rep. Mel Watt (D-N.C.) warned the airline CEOs that federal
antitrust investigators said they would examine whether the deal would hamper
future competition. "If the antitrust department is going to have any problems,
that's likely where it's going to be."
One concern is that other top
carriers would begin swallowing smaller airlines to keep pace. Merger talk is
already circulating about Delta and other airlines.
Delta officials
downplayed a published report Friday that CEO Leo Mullin would pursue a
merger with Continental Airlines or some other move if the
United Airlines-US Airways union goes through.
"Nothing
has changed," said Jackie Pate, a Delta spokeswoman. "We're looking at all our
options."
On Friday, USA Today reported that Mullin said Delta was in a
"study phase" on whether to revive its 1998 merger attempt with Continental.
That echoed an interview last week in the Journal-Constitution in which
Mullin said: "We're obviously in a study mode. There's a wide range of options
there."
Ray Neidl, an analyst with ING Barings in New York, said
Mullin's comments could mean that competing airlines want to get the attention
of the Justice Depart- ment."
The thinking: The Justice Department might
not approve United's plan if it threatened to open the floodgates to other
airline mergers, Neidl said.
American Airlines likewise reportedly has
been courting Northwest Airlines. But Northwest owns a nonvoting majority stake
in Continental, making neither merger likely without the other.
Continental spokesman David Messing said the Houston-based carrier had
no comment on Delta's intentions. Minneapolis-based Northwest also declined
comment Friday.
--- Staff writers Peralte C. Paul and Russell Grantham
contributed to this report, along with Dow Jones News Service and Knight Ridder
Newspapers.
GRAPHIC: Photo
A US Airways jet lands
in Charlotte. If a United-US Airways merger occurs, United will "compete with
Delta along routes in the South." / CHUCK BURTON / Associated Press
LOAD-DATE: June 24, 2000 
