Senate panel will hold airline merger hearing

[deltawatch]

U

.S. Senate panel will hold airline merger hearing

WASHINGTON, Jan 9 (- U.S. Senate lawmakers said on Tuesday they would more closely examine potential airline mergers, including the hostile bid for Delta Air Lines Inc.(DALRQ.PK: Quote, Profile , Research) by US Airways Group Inc. (LCC.N: Quote, Profile , Research)

The Commerce Committee said it would hold a hearing on airline consolidation on Jan. 24. The panel did not release a witness list and a spokeswoman would not say if airline chief executives would be called to testify.

Lawmakers in both houses have expressed concern about the potential impact of new consolidation on consumers, especially the potential for higher fares and more erosion of service to small communities.

"I think we want to understand from the airlines what's happening here," Sen. Byron Dorgan, a North Dakota Democrat and member of the commerce panel, said in an interview.

"I'm concerned about any additional proposals by large carriers. I don't think we need less competition. I think we need more. From the standpoint of consumers I don't think it's beneficial to see some of the largest carriers marry up," Dorgan said.

Dorgan said he wants to hear from the airlines themselves as well as Justice and Transportation Department regulators who would review any formal proposals.

Sources have said United Airlines, a unit of UAL Corp. (UAUA.O: Quote, Profile , Research) and Continental Airlines (CAL.N: Quote, Profile , Research) are in preliminary talks about a merger. In November, US Airways made an unsolicited offer for larger Delta, which is bankrupt. Delta management rejected the $8.7 billion bid.

Separately, Northwest Airlines Corp. (NWACQ.PK: Quote, Profile , Research) wants to evaluate strategic alternatives, including a merger. Continental is seen as a potential partner.

The House of Representatives is also likely to hold hearings, according to congressional aides.

Rep. James Oberstar, a Minnesota Democrat and chairman of the Transportation Committee, has "very strong concerns" about possible negative impacts airline mergers, especially the potential for higher fares, a spokesman said.

To ally concerns, the aide said Oberstar would have to be convinced that airline consolidation would generate a general economic upside and not hurt consumers.

Congressional concerns over service and competition, which led to hearings, contributed to the failed merger between United and US Airways in 2001.

The new proposals for consolidation come as the industry is on a financial upswing after slowly emerging from its worst economic downturn.

The leading trade group for big U.S. airlines projected on Tuesday that passenger and cargo carriers will net an estimated $4 billion next year.

The group estimates the major carriers will report 2006 earnings of between $2 billion and $3 billion. The last year the industry made money was 2000, which was also the last year for consecutive annual profits.

Big airlines are running much leaner than they were five years ago as industry restructuring, most of it in bankruptcy since 2002, has led to major cost savings and capacity cuts. But the industry acknowledges it must improve its weak credit ratings so it can weather normal economic turbulence -- like fuel price spikes.

 

[Henderfuzz]

U

Ok heres my question. I understand the need to look into this merger or buyout. But where was the congress when oil companies, or comunication companies, and utility companines were looking to merge. I didnt see big hearings going on about that. Look what that did for consumers.
So whats wrong if this makes a larger company and we make bigger profits. Isnt that what a business is all about to make a profit. I guess thats not what America is about anymore. Also look what happened when congress muddy the water for the united usairways merger. Both airlines went into bankruptcy and usairways almost went out of business.
So yes let congress get involved again they always do the right thing right? Wrong!

 

[phasersonstun2]

That's because they use the airlines all the time.

 

[RowUnderDCA]

Ok heres my question. I understand the need to look into this merger or buyout. But where was the congress when oil companies, or comunication companies, and utility companines were looking to merge. ?

in Republican hands.

 

[A320 Driver]

Once the toads in congress get involved, nothing, and I mean NOTHING good can come of it.


A320 Driver :down:

Bunch of power hungry, punch drunk idiots.

 

[PITbull]

If I had to choose between who would have the best interest of the public with regard to these mergers, I wouldn't lean towards any corporate executive that's for sure.

And the public has the power to vote Congress out...execs only have the power-hungry, greedy BOD.

 

[skyflyr69]

Ok heres my question. I understand the need to look into this merger or buyout. But where was the congress when oil companies, or comunication companies, and utility companines were looking to merge. I didnt see big hearings going on about that. Look what that did for consumers.
So whats wrong if this makes a larger company and we make bigger profits. Isnt that what a business is all about to make a profit. I guess thats not what America is about anymore. Also look what happened when congress muddy the water for the united usairways merger. Both airlines went into bankruptcy and usairways almost went out of business.
So yes let congress get involved again they always do the right thing right? Wrong!

Henderfuzz, Its because the consumer wants CHEAP, FREE, gimmie all you got, fares from the airlines.
Wouldn't it be great if OTHER industries were the same??

How about a web sight set up for phone companies, grocery stores etc???
Deregulation for airlines has NEVER worked correctly.
The passenger has reaped the benefits. I wish the passenger would COMPLAIN about other industries etc!!!


Why not hold hearings on eco sytem events, phone mergers,
media mergers etc. The Airline employees should hold an INDUSTRY WIDE Chaos over an important holiday weekend.
But airline employees are such --ssies they will just --nd over and take it all the time.

SHUT IT DOWN !!!!!!!!! :angry:

:angry: :angry: :angry:

 

[PHL]

Deregulation for airlines has NEVER worked correctly.
The passenger has reaped the benefits. I wish the passenger would COMPLAIN about other industries etc!!!
Why not hold hearings on eco sytem events, phone mergers,
media mergers etc. The Airline employees should hold an INDUSTRY WIDE Chaos over an important holiday weekend.
But airline employees are such --ssies they will just --nd over and take it all the time.

SHUT IT DOWN !!!!!!!!!

1.) Deregulation HAS worked. There is no reason in the world for the government to control a free market, regulate airfares(which are, by nature, subject to competition), and regulate routes. Air travel has increased 10+ fold since 1978 and many jobs have been created in the airline, travel and all other associated industries. Stop taking a microeconomic view of the situation. You're as marketable as the next guy and have no chains holding you to the job.

2.) Other industry mergers do, in fact, often go through DOJ and some have even caught the ire of congress. And guess what - lots of jobs have been lost in every one of those industries (oil, telecom, etc.). The airline industry does not operate in a vacuum in this economy. But, it's no surprise that this new Democratic congress wants to open up the box and see how they can meddle in free markets. Button up your back pocket, too, because YOUR wallet is next.

 

[delldude]

in Republican hands.

 

[PHL]

yes Bob but....

Those agencies you cite do not regulate the commercialism of aviation. They don't control fares, routes, or the way the airlines run themselves as a business. they are there for safety oversight, and admittedly sometimes a bit too much but that's what we're faced with. Other industries have government watchdogs that are there for safety reasons too, although some might argue that they overstep their boundaries. FDA, FCC, FTC, etc.

Had we let the government continue to keep the airline industry regulated, we would probably still have the legacies with no new entrants and much less friendly fares. We probably wouldn't have frequent flyer programs (is that a good or bad thing????). But most of all, it's highly unlikely that the overall industry and all it's peripherals would have grown so much. There are still more jobs today than there were at the time of deregulation, even if you account for annual average employment growth over the last 30 years.