Rockefeller says he's wary of airline merger
CHARLESTON, W.Va. -- West Virginia's senior senator is worried that the proposed merger between American Airlines and US Airways could reduce competition and increase ticket prices for consumers.
"We will review the proposed merger of American Airlines and US Airways very closely. Industry consolidation has created stronger and more financially viable airlines, which are necessary for our country's long-term economic growth." Sen. Jay Rockefeller, chairman of the Senate Commerce Committee said in a statement on Thursday.
"But it has also resulted in fewer choices for consumers, higher air fares, and reduced air service to small and medium sized communities. Any further airline merger must be carefully evaluated to make sure it is in the best interest of the traveling public by creating more competition, more options, and lower fares," Rockefeller, a Democrat, said.
The U.S. Department of Justice filed a suit on Tuesday to block the proposed airline merger.
The Consumer Travel Alliance, a nonprofit that seeks to give consumers a voice in transportation issues, praised the U.S. Department of Justice for filing the suit.
CTA has opposed the merger since it was announced in February, arguing it would offer consumers no new benefits or flight destinations, and would impose higher airfares and fees.
If the merger goes through, the new company would become the nation's largest air carrier.
A Government Accountability Office review released on June 19, said the merger would reduce competition on more than 1,600 airline routes, used by more than 53 million passengers annually.
That would be a greater loss in competition, the GAO report states, than the loss created by the merger of United Airlines and Continental Airlines in 2010.
"The last decade has seen the U.S. airline industry go through a dramatic restructuring." Rockefeller said, during a June 19, hearing of the Senate Subcommittee on Aviation Operations, Safety and Security. "Today, we examine the latest chapter in this story -- the proposed merger of American Airlines and US Airways into the nation's largest airline."
"Consolidation was a necessary evil -- no industry sector could sustain year after year of multi-billion dollar losses. Although more carriers often meant more options for travelers, a weak and unstable industry was bad for our economy, our communities, passengers, and airline employees," Rockefeller said.
The key question raised by the pending merger, Rockefeller said, was "whether this latest, and perhaps final, round of consolidation will bring the long sought stability and the benefits that come with it -- or whether instead it will bring fewer choices and higher fares for consumers."
During the hearing, Rockefeller discussed the negative aspects of airline mergers.
"No one knows this better than airline employees who have been battered by merger after merger. They have lost jobs, wages, benefits, and, in many cases, their pensions.
"Customer service has suffered. Routes have been cut to small and rural communities leaving them with fewer choices or worse -- no service at all.
"Had the Essential Air Service program not been in place to replace discontinued air service, many communities over the last several years would have lost air service all together," said Rockefeller a major backer of EAS, which guarantees continued commercial air service to small communities across the country.
On Friday, the International Brotherhood of Teamsters announced it was ending its year-long campaign to organize aircraft mechanics and other personnel at American Airlines, which filed for bankruptcy in 2011.
"The Teamsters Union has determined that the recent announcement that the federal government will fight the proposed merger between US Airways and American Airlines places the workers at American Airlines in significant turmoil," Teamsters spokesman Bret Caldwell said.
"American Airlines' emergence from bankruptcy has been cast into doubt and the union has determined that the continued conflict between labor organizations is not in the best interest of the workers. This is not a time for workers to fight among themselves."
More than 6,000 American Airlines employees had already signed cards supporting the Teamsters.
During the June hearing, Rockefeller also said, "The advantages of previous consolidations have not yet been passed on to consumers. They are facing higher fares, crowded and often smaller, less comfortable planes, and fees for every conceivable service.
"The industry has become profitable and devised new revenue sources, yet it still ranks at the bottom of customer satisfaction services."
Rockefeller also said recent airline mergers have not helped service to smaller, rural communities.
"In the past, I have supported previous airline consolidation because I thought it was necessary for the health of the industry," Rockefeller said.
The Justice Department approved three previous mergers: between Delta and Northwest, United and Continental, and Southwest Airlines and AirTran Airways.
"I am still waiting, though, to see the lasting benefits of previous mergers," Rockefeller said.
"As we evaluate this proposed merger, we must make sure that the advantages of a strong aviation sector benefit more than just shareholders. They must benefit the passengers who deserve more choices and better service for the ticket prices they pay."
Reach Paul J. Nyden at email@example.com or 304-348-5164.