Lawmakers weigh in, worry over proposed airline mergers

From Kathleen Koch
CNN Correspondent

WASHINGTON (CNN) -- As merger mania grows in the airline industry, so do questions about what the trend means to consumers.

While government regulators review a proposed merger between airline giants United and US Airways, a House member has proposed giving the government more power to protect travelers. A senate committee also was examining Thursday whether current laws do enough to ensure airline competition.

Sen. John McCain, the powerful chairman of the Senate Commerce Committee, introduced a resolution Wednesday cautioning against the merger, which would create the United States' largest airline, one capable of dominating a quarter of the market.

"We conclude whatever air travelers stand to gain from the merger is outweighed by what they stand to lose," the Arizona Republican said.

American and Northwest airlines also are considering joining forces, and Delta Airlines has expressed interest in Continental.

"We are seeing the likelihood of consolidations to the degree where we only have three major airlines in America," McCain said. "That's not the promise and commitment of airline deregulation."

U.S. Rep. James Oberstar of Minnesota, who opposes the United-US Airways deal, introduced legislation Wednesday that would allow regulators to make airlines roll back fares and to prevent discrimination against new airlines if three or fewer airlines control 70 percent of flights.

"I believe we need to begin thinking about the steps we would need to take to protect consumers if competition in the industry is reduced to a point where it is no longer an effective check on monopolistic behavior," said Oberstar, the senior Democrat on the House Transportation Committee.

Consumer advocates warn that airline mega-mergers can lead to one airline controlling too many hubs.

The Transportation Department has found that fares at hubs where there is little competition can be up to 40 percent higher than tickets at airports served by several carriers.

"You could get the country divided up into three major end-to-end networks, each of which has a stranglehold on one region of the country," said Mark Cooper of the Consumers Union.

US Airways said in a statement that it's confident the merger is in the public interest and will bring "overwhelming consumer benefits."

And United's CEO assured Congress in June that the merged airline would be a friendly giant, increasing service to many communities and giving consumers more travel options.

Reuters contributed to this report.

Senator introduces bill to make airlines more accountable
July 20, 2000
Congress scrutinizes hub-to-hub travel
June 14, 2000
Talks of airline mergers fill the air
June 7, 2000
United proposes buying US Airways: What does that mean for fliers?
May 24, 2000

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