|By Jon Hilkevitch | A leading congressional force on aviation issues came out Thursday against the proposed merger between United Airlines and Continental Airlines.
U.S. Rep. James Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure Committee, said the proposed $3 billion merger announced this week would accelerate the consolidation of the airline industry and lead to higher fares, downgraded service and fewer choices for travelers.
• Oberstar’s letter objecting to the merger.
Oberstar, who opposed the merger of Delta Air Lines and Northwest Airlines almost two years ago for the same reasons, sent a letter expressing his concerns to the anti-trust division of the Justice Department.
“This was not what I voted for in 1978 when Congress voted to deregulate the airline industry,” he said in Washington during a phone conference call with reporters. “We expected that leaving the market place to the competitive forces would increase competition and increase the number of new entrants.”
Initially, that is what happened. But today, almost all of the fledgling airlines that began service after deregulation have disappeared, he noted, and the industry is moving toward domination by three “mega-carriers” — a reference to Delta, American Airlines and United.
Oberstar said the “fears that I expressed in Northwest-Delta are now fully realized.”
“The airspace is the common heritage of all Americans. It is not the private domain of corporate executives…in the airline sector,” he added.
Government approval of the United-Continental merger would lead to reductions in flight capacity overall and cuts in service to city pairs, especially involving smaller markets, he warned.
“These carriers rarely compete head-to-head on serving smaller markets,” Oberstar said.
“This transaction fundamentally alters the nature of competition…and it must be stopped,” he said. “This is wrong and it is bad for competition” nationally and internationally. “Bigger doesn’t mean cheaper or less cost. It means you accumulate more debt,” he said.
Justice Department officials offered no immediate response to Oberstar. Last year, the department objected to a proposal by United and Continental to cooperate on international routes within the Star Alliance of airlines. The department recommended a more limited trans-Atlantic agreement instead.