Senate hears concerns on carriers' consolidation

Lawmakers: Consumers lose in airline mergers?

Leo F. Mullin, chairman and CEO of Delta Air Lines, spoke before the Senate Judiciary Subcommittee on Antitrust, Business Rights and Competition Wednesday

In this story: Less competition? Reregulation threatened RELATED STORIES, SITES

WASHINGTON (CNN) -- A spate of proposed airline mergers could diminish competition and harm consumers, federal lawmakers and aviation officials said Wednesday.

"I worry that these acquisitions and these mergers can only spell higher costs for the consumer and in the long run problems for the employees of these companies," United States Sen. Arlen Specter, R-Pennsylvania, said during a Senate hearing on airline consolidation.

American Airlines has proposed taking over ailing TWA, while United and US Airways want to merge. Delta and Continental also are reportedly in merger talks.

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The mergers should be scrutinized closely to determine how they will affect the competitive market, said Sen. Orrin Hatch, a Utah Republican.

"Because airline travel is an integral part of peoples' lives, we should be particularly mindful of the effect mergers and consolidation in the market could have on the consumers," he said.

Less competition?

Others wondered if the mergers could diminish competition.

"If this merger frenzy continues, we could end up with three, two, maybe only one airlines, and I think that we have a tremendous obligation to the American public to make travel more pleasant," said Sen. Harry Reid, a Democrat from Nevada.

America West CEO William Franke worried that smaller airlines would suffer.

"If these proposed transactions are approved, the current level of service in these markets will be threatened and our ability to grow will be stymied," he said.

Continental Airlines CEO Gordon Bethune said mergers of large airlines would create a cartel that will be a disaster for customers, leading to poorer service and harming competition.

Reregulation threatened

Other mergers should be carefully scrutinized, said Delta CEO Leo Mullin, who characterized the American-TWA deal as a "rescue mission."

"I would recommend that all of these other transactions be delayed until we can fully assess the consequences," he said.

Sen. Christopher Bond, R-Missouri, defended American Airlines' takeover of ailing TWA.

"What American Airlines proposes to do for TWA, for the 20,000 employees worldwide, is to buy the assets and keep it operating," he said.

Perhaps lawmaker should consider reregulating the industry, Specter hinted.

"I would not like to see the federal government back regulating airlines, but I wonder if we're better off now than we were before deregulation occurred," he said.

Lawmakers: Airline mergers may harm consumers
February 2, 2001
Transportation secretary urges closer look at airline competition
January
McCain criticizes proposed airline merger
July 27, 2000

TWA
American Airlines
Delta Airlines
Continental Airlines
America West
United Airlines

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