Airlines Testify on Effects of Mega-Mergers

Feb. 7 -- Competing airline executives aired their competing visions of how mergers in the air industry may or may not benefit consumers.

The Senate Judiciary Committee heard testimony today from air carriers who might stand to gain or lose from the industry trend toward consolidation. The panel was called as the world's largest airline, United, awaits regulatory approval to purchase US Airways for $11.6 billion, and American, the nation's second largest carrier, pursues a buyout of bankrupt Trans World Airlines Inc. and some US Airways assets for more than $5 billion.

The chairman of Delta Air Lines, Leo Mullin, told the Senate Judiciary Committee today that more airline mergers should be allowed, if only to help balance the anti-competitive effects of just two carriers handling half of domestic passenger traffic.

"If these transactions are allowed to go forward with anunderstanding that the door is now closed in terms of furtherindustry consolidation, then consumers and other carriers maybe required to deal with a huge duopoly," Mullin testified.

Gordon Bethune, Chairman of Continental, said the mergers of these air giants will harm competition, increase airport delays and reduce customer service.

"The proposed mega-mergers are bad for consumers, bad for communities and bad for employees," Bethune said. "Customer service levels at the merging carriers will continue to tumble as those carriers will be able to do nothing more than keep just their systems running."

He also warned that more mergers would follow if these are approved. "Other airlines will be forced to combine, be carved up, or be put out of business by the onslaught brought on by the United and American cartel," said Bethune.

Bethune did not discuss reports that Continental itself has been in talks with Delta about a possible merger.

'Consumers Will Reap the Benefits'

United Airlines chairman and chief executive James Goodwin spoke in defense of their proposed purchase of US Airways: "We believe domestic competition will be enhanced and consumer choice, and convenience will be improved."