House Transportation Chairman: UA/CO merger 'counter to the promise of deregulation'

Calling the US Dept. of Justice's clearance of the proposed United Airlines-Continental Airlines merger "regrettable," House of Representatives Transportation Committee Chairman James Oberstar (D-Minn.) said "it may be time for Congress to rethink its vote in 1978" to deregulate the US airline industry. DOJ said late Friday the transfer of CO slots and other assets at Newark International to Southwest Airlines "resolves the department's principal competition concerns" related to the merger (ATW Daily News, Aug. 30). Oberstar in May wrote a letter to DOJ to "strongly urge" it to reject the merger on antitrust grounds (ATW Daily News, May 10).

Oberstar said in a statement that DOJ "had little choice" but to approve the UA/CO combination owing to the "very narrow set of criteria" current US law allows it to use to make judgments on airline mergers. He said there is a "need to give broader authority over such mergers to the Department of Transportation, allowing DOT to consider such factors as the impact a merger will have on service to communities and customers, as well as the effect the merger could have on the industry as a whole."

He added that government examination of airline mergers should include "consideration of whether a merger will inevitably trigger others, ultimately reducing the industry to a few large carriers, each of which is unwilling to compete seriously in markets dominated by one of the others." Following the Delta Air Lines/Northwest Airlines and UA/CO mergers, Oberstar said, "Can a US Airways-American Airlines merger be far behind? This consolidation of the mainline companies into three or four mega-carriers is not what I voted for in 1978…Airline consolidation brings consumers and communities fewer choices and less competition, usually leading to increased fares and reduced levels of service. That runs directly counter to the promise of deregulation."