Copyright 2000 P.G. Publishing Co.
Pittsburgh
Post-Gazette
June 15, 2000, Thursday, SOONER EDITION
SECTION: NATIONAL, Pg. A-1
LENGTH: 797 words
HEADLINE:
U.S. URGED TO GIVE AIR MERGER HARD LOOK
BYLINE: JACK
TORRY, POST-GAZETTE NATIONAL BUREAU
DATELINE:
WASHINGTON --
BODY:
Two senators yesterday
urged the Justice Department to "thoroughly scrutinize" United
Airlines' plan to buy US Airways, warning that the
merger could spark a chain reaction of consolidations, leaving
the United States with only three major air carriers.
In a letter to the
Justice Department, Sens. Mike DeWine, R-Ohio, chairman of the Senate antitrust
subcommittee, and Herb Kohl, D-Wis., warned that if the sale were approved, it
could lead to "decreasing competition" and potentially higher air fares.
Noting that an expanded United would control nearly one-third of all
domestic passenger seats, DeWine and Kohl said the airline's "sheer size and
scope will likely cause anti-competitive problems in more than a handful of
markets. ... We ask you to thoroughly scrutinize this merger on a route-by-route
basis to make sure that competition and consumers are protected." Their letter
to Joel Klein, assistant attorney general for antitrust issues, was made public
at a spirited hearing of the antitrust subcommittee at which a number of
senators expressed misgivings about permitting United, the nation's largest
airline, to combine with US Airways, the sixth-largest.
United's
proposed $ 11.6 billion purchase of US Airways has sparked a flurry of hearings
this week on Capitol Hill, including simultaneous sessions yesterday by DeWine's
antitrust subcommittee and the House Judiciary Committee.
Testifying
before DeWine's subcommittee, Sen. Rick Santorum, R.-Pa., said he saw "a lot of
pluses" in the sale but also wanted a commitment from United that it would not
shift any of the 2,270 maintenance jobs at Pittsburgh International Airport to
United's new maintenance facility in Indianapolis.
At the House hearing,
Allegheny County Executive Jim Roddey urged lawmakers to insist that United go
forward with US Airways' announced plans to build a new state-of-the-art
maintenance facility at Pittsburgh International.
And for a second day,
James Goodwin, chairman and chief executive officer of United, and Stephen Wolf,
chairman of US Airways, tried to convince skeptical lawmakers that the merger
would provide U.S. air passengers with far greater choices to fly domestically
and abroad without raising fares. The executives yesterday testified before
DeWine's subcommittee as they had Tuesday before the House Transportation
Committee.
Goodwin has promised to make public within the next four
weeks United's decision on whether to proceed with the new Pittsburgh airport
maintenance facility.
At the House hearing yesterday, Sen. Peter
Fitzgerald, R-Ill., echoed DeWine's call for a Justice Department inquiry,
saying, "When the airlines talk about the friendly skies, are they talking about
being friendly with each other or being friendly to consumers?"
DeWine
did not go so far as to say he would oppose the sale but did tell the airline
executives: "If this deal is approved, the competitive scales will tip
dramatically in favor of United. US Airways will be eliminated as a competitor,
and United will suddenly become much, much bigger than its closest competitors.
"The problem is that bigger airlines means fewer airlines, and that's
not necessarily good for consumers. And if this is a bad deal for consumers,
then I have a problem with it."
Expressed throughout yesterday's Senate
hearing was the fear that the next-largest airlines -- America, Delta, Northwest
and Continental -- would be forced to seek merger partners as well. Mark Cooper,
research director for the Consumer Federation of America, testified that the
sale "would trigger a round of mergers that would leave consumers with fewer and
fewer choices across the nation."
As they had Tuesday, Goodwin and Wolf
yesterday mounted a vigorous defense of the proposed merger. Goodwin
characterized it as "strongly pro-competitive. The merger is about expanding
customer choice."
Wolf hailed the merger as an "absolute home run" for
US Airways' employees, saying in his prepared remarks that they have "faced
periods of uncertainty" about the future of the company. US Airways is
Pittsburgh's largest private employer, with 11,700 workers.
The new
United Airlines would have 146,000 employees and twice as many daily flights as
American, the second-largest airline. In an effort to win Justice Department
approval, United and US Airways have agreed to lease jets to the newly created
DC Air, which would operate out of Washington Reagan National Airport. DC Air
would fly to 43 cities, including two daily flights to Pittsburgh.
The
Justice Department has not said whether it will oppose the merger. In 1998, the
department went to court to block a proposed merger between Northwest and
Continental. A trial in federal court on that case is expected this summer.
GRAPHIC: PHOTO, PHOTO: Hillery Smith
Garrison/Associated Press: U.S. Airways Chairman; Stephen Wolf, center,
testifies yesterday. With him were United Airlines; Chairman James Goodwin,
left, and DC Air CEO Robert Johnson.
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