Copyright 2000 The Buffalo News
The Buffalo News
June 9, 2000, Friday, CITY EDITION
SECTION: LOCAL, Pg. 1C
LENGTH: 604 words
HEADLINE:
SCHUMER QUESTIONS BENEFITS OF AIRLINE DEAL
BYLINE: DOUGLAS TURNER; News Washington Bureau Chief
DATELINE: WASHINGTON
BODY:
Warning that the proposed merger of United
Airlines and US Airways could result in higher fares at Buffalo
and worse service, Sen. Charles E. Schumer on Thursday asked for a meeting with
Justice Department antitrust chiefJoel Klein.
As it happened, Klein
announced that his office will give "careful scrutiny" to the
merger and others that are likely to follow.
"This is
an industry in which one needs to pay careful attention to the competitive
issues," Klein said. "We've now developed a situation where there is a great
deal of hub dominance by individual carriers, and I think it raises significant
competitive concerns." Schumer, D-N.Y, a member of the Senate judiciary
committee, said he is not opposed to the merger but will be
unless it results in improved fares and services for Buffalo and other upstate
cities.
He said the merger plan would reduce the number
of daily flights from Buffalo to Dulles International Airport outside
Washington, D.C., from 11 to eight. Flights to Dulles from other upstate
airports will be similarly cut, he said.
In addition to there being
fewer flights, Schumer warned that seating on these flights will be cut in half
because a proposed successor airline, DC Air, will be flying
50-seat regional jets instead of the 112-seat jets currently used by US Airways.
In his letter to Klein, Schumer asked whether a "merger
of the world's largest and the nation's sixth-largest carriers would . . .
inhibit free and fair competition."
Schumer said in an interview that
congressional and consumer concern about the merger offers "a
decent chance to get the Justice Department to help solve upstate's
airline problems." Schumer said one possible solution he will
propose to the Justice Department is auctioning off to low-cost
airlines such as JetBlue some of the 212 takeoff and landing
slots that DC Air would get from the two airlines at Reagan
National Airport, serving Washington, D.C.
Schumer said he spoke with a
United official who told him, "We want to work with you." He said the proposed
spinoff regional airline, DC Air, that would serve Buffalo
"looks like a dubious enterprise."
"It could end up being very
expensive, incompetent, and being just a tool of the newly merged
airlines," he said.
Rep. Louise M. Slaughter,
D-Fairport, last week called DC Air "a front."
She said her office and
other congressional offices that have complained about the
merger are negotiating with the General Accounting Office on
her proposal for a GAO inquiry.
The Justice Department sued American
Airlines last year, alleging that the carrier monopolized
routes out of its Dallas hub and drove out discount carriers with predatory
pricing. American contends that start-up carriers abandoned the market because
they were ineffective competitors. The case is awaiting trial.
The
Justice Department also challenged Northwest Airlines' purchase
of a stake in Continental Airlines two years ago, contending
that the transaction would eliminate competition on seven routes.
AMR
Corp.'s American Airlines and Delta Air Lines
have discussed combinations, as well as British Airways and KLM Royal Dutch
Airlines. Meanwhile, AMR has separately approached Northwest
Airlines, and some analysts speculate that Delta may court
Continental Airlines.
"United may have set up a
stampede of merger activity which will not abate unless the
Department of Justice or Congress decides to bring it to a screeching halt,"
said Paul Dempsey, vice chairman of Frontier Airlines and a law
professor at the University of Denver. Bloomberg News Service contributed to
this report.
LOAD-DATE: June 12, 2000
