Loss of hubs feared in airline deal
WASHINGTON — Members of Congress expressed misgivings Tuesday about a proposed merger between American Airlines and US Airways, pressing company officials about whether the $11 billion deal would preserve competition and jobs and keep fares from rising.
The combined company, which would become the world's largest airline, would have a concentration of hubs serving the eastern and southern portions of the country, including airports at Dallas-Fort Worth, Miami, Charlotte, Phoenix and Philadelphia, as well as John F. Kennedy in New York.
In a hearing before a House of Representatives Judiciary subcommittee, Gary Kennedy, general counsel at American, said there were no plans to close any hubs.
“We have a high degree of confidence the hubs we have will remain in place,” he told the Subcommittee on Regulatory Reform, Commercial and Antitrust Law.
In particular, Kennedy said that Miami International, an American Airlines hub, would continue to serve as a gateway to Latin America and that Charlotte and Dallas still made sense for north-south and east-west air traffic, respectively.
“We find them to be highly complementary of each other,” he said.
Lawmakers from states where hubs are located weren't so sure.
“The geography doesn't seem to make sense,” said Rep. Blake Farenthold, R-Texas.
Rep. Joe Garcia, D-Fla., wanted assurance that the new company wouldn't scale back its operations in Miami. He noted the billions of dollars in bond debt assumed by Miami-Dade County, the airport's owner, to build new terminals to serve American Airlines.
“In my community, we are leveraged to the hilt because of this airport,” he said.
Stephen Johnson, the executive vice president for corporate and government affairs at US Airways, told him, “You should be optimistic about Miami's future in this.”
Other lawmakers were concerned about the effects on pricing. Rep. George Holding, R-N.C., worried that fares might go up as the two carriers ceased competing in nearby markets.
“It costs a lot more to fly from Charlotte to Washington than it does from Raleigh to Washington,” he said. “And that's concerning.”
American and US Airways are under pressure to keep up with their larger rivals United and Delta, themselves the products of recent mergers. Dozens of air carriers have combined since the industry was deregulated in 1978, and while the airline marriages have resulted in efficiencies for the industry, critics say they've hurt competition.
“We have seen many mergers in the 35 years since deregulation,” Christopher Sagers, a professor and antitrust expert at the Cleveland-Marshall College of Law, told the panel. “Quite often, they have been disappointing.”
Johnson said that after a long period of lurching from crisis to crisis, the airline industry had become more stable as it had consolidated. But Kennedy said the industry was still vulnerable to global shocks that included fuel price spikes, terrorist attacks and recessions.
“That's not going to go away,” he said.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Kings Family Restaurants sold to California firm
- GetGo to hire 300 workers
- Mylan raises bid for fellow drugmaker; Perrigo says ‘no’
- DeVry shift to online classes prompts closing of Pittsburgh campus
- Oil at $65 could free 500,000 barrels from shale ‘fracklog’
- Profit down at First Niagara
- Retailers vie for workers in tightening labor market
- California drought may be felt in Pittsburgh restaurants, groceries
- Pittsburgh union serving TV, film production looking for lots of help
- Low Marcellus gas prices cut into EQT profits
- Settlement to cost Deutsche Bank $2.5B