House Transportation Chairman: United/Continental merger 'wrong'

By Aaron Karp | May 10, 2010

US House of Representatives Transportation Committee Chairman James Oberstar (D-Minn.) last week wrote a letter to the Dept. of Justice to "strongly urge" it to reject the United Airlines/Continental Airlines merger on antitrust grounds. He said the tie-up would be "another domino in the chain" of airline industry consolidation, likely leading to "further consolidation" and less choice for consumers.

Oberstar commented that DOJ in 2009 "regrettably…departed from its policy of preventing anticompetitive activity when it approved the Delta-Northwest merger." He called for the department to demonstrate "a renewed sensitivity to the importance of competition" in reviewing the UA/CO combination. According to the Houston Chronicle, he told reporters in a conference call that his opposition is steadfast. "I would not support any minuscule alteration or even larger ones" by the airlines to make the merger more palatable, he said. "This is wrong. This is bad for competition, and it will be a disservice to all of aviation domestically and internationally."

Ultimately, approval or disapproval of the proposed merger rests with DOJ and the Dept. of Transportation. Congress has no official role, though there are indications that both the House and Senate will hold hearings on the UA/CO deal. CO Chairman, President and CEO Jeff Smisek told the Chronicle that he is "highly confident this transaction will close," pointing out that the two carriers "have no international route overlaps whatsoever."

Discuss this news 8

10 May06:10

If you read the "white

By Tom

If you read the "white papers" on here...it actually all makes very good sense. What James Oberstar doesn't realize is the airlines cannot make money with the way things are....change has to come. Three Global US Airlines makes sense...Southwest will keep domestic prices in check. The "legacy" carriers employees deserve job security and some of the wages back that they gave back. By not approving the mergers, the carriers cannot do this. Something has GOT to change! Southwest is now the industry leader in wages!

10 May07:46

Do the names Sprit, Frontier,

By Anonymous

Do the names Sprit, Frontier, Allegiant ring a bell? The 'big' legacy gloat airlines have costs that are way too high. Consolidating them into larder entities with more control of the skies will lead to increased costs to the public without adding any benefit. Remember the bank 'too big to fail' issue - just imagine a strike by the new continental/united venture. How much of the system would be shut down? I do not support this merger.

10 May12:27

Hmmmm...does Mr. Oberstar's

By pacman

Hmmmm...does Mr. Oberstar's position have anything to do with the fact that the UA/Co merger would create a more formidable competitor for DL? I don't recall that he voiced opposition to the DL/NW merger which create a behemoth with some of the most unassailable fortress hubs in the industry (even before the merger).

10 May12:42

Strike??? The damn

By Chuck

Strike??? The damn government has to approve a strike. Will that ever happen? Hell no!! The government would never allow a big airline to strike. Don't worry about that. Consolidation is the key to a dependable airline system. The industry needs SOME government regulation to stop oil price volatility and restrict slots to the biggest airports to avoid all the delays associated with trying to cram too many cookies in the jar. I know it's got to be fair. Maybe limit the number of small RJ's. There are several ways to do all of this and still have free enterprise.

10 May13:00

It does seem fishy that the

By Mickey

It does seem fishy that the good congressman has too much skin in the game to fairly criticize this particular merger as it would increase competition for the behemoth Delta. I think the fact that Rep Oberstar represents an area where Delta has a major hub (read fortress) should disqualify him from making any comment at all.

10 May14:43

I agree with pacman and

By Erik Weseman

I agree with pacman and Mickey; Rep. Oberstar is objecting to the Continental/United merger because he considers the new United Airlines to be a competitive threat to Delta which has a hub at Minneapolis/St. Paul International Airport. Oberstar has a personal conflict of interest because he didn't seem to object to the Delta/Northwest merger two years ago only after receiving reassurances from Delta that the Minneapolis hub will remain open after that merger closed. He is afraid the new United Airlines will invade Minnesota and drive Delta out of Minneapolis from its home base in Chicago. Old or new, United has no interest whatsoever in Delta's Minneapolis turf. United is far more interested in Newark, N.J., a hub it will inherit after its merger with Continental closes, than Minneapolis. Delta already dominates the U.S.-Japan travel market with virtually unlimited U.S.-Japan and Japan-third country flight rights and yet it received two new daily flights into Tokyo's Haneda Airport which I believe the latter is even more anticompetitive even though Delta applied for all four daily Haneda slots in response to Japan Airlines selecting American Airlines as its alliance partner. The congressman doesn't seem to have a problem with that either and to me that is hypocracy plain and simple. He is concerned only with protecting Delta from further competition especially in Minneapolis and New York and that is the pot calling the kettle black. Forget Oberstar; Continental/United merger has my unconditional support.

15 May09:24

Oberstar could'nt have it

By Anonymous

Oberstar could'nt have it more wrong! If the airline industry is as un-reliable and has poor customer service why does he want to maintain the status quo. Talk about a politician who just does'nt get it!

11 Aug21:53

This objection is from

By Anonymous

This objection is from another politican who doesn't have a clue about this subject. I usually fly overseas at the rate of 100,000 miles a year and this merger will make the US airlines more competitive versus the foreign carriers. What the congressman wants is more give aways to foreign corporations. remember how much of the new Delta is Dutch owned.