Scrutiny of United-US Airways deal ends

WASHINGTON -- Zoe Lofgren is a member of Congress with all the special perks that brings. But twice a week, as she commutes between Washington and San Jose, Calif., she becomes just another airline passenger subjected to the same problems as thousands of other frustrated travelers.

On her way back to the capital Monday, she spent an hour in line to get a boarding pass, then found out the flight would be delayed two hours.

''This is not an isolated event,'' the California Democrat said Wednesday at a House Judiciary Committee hearing on the proposed merger between United Airlines and US Airways.

In seven hearings over two weeks before four congressional committees, the deal has prompted near-unanimous skepticism, if not outright opposition. And time after time, the lawmakers' own anecdotes of high prices, hampered travel plans and dwindling airline choices in many communities appeared to be a driving force behind their opinions.

''Right now, there isn't much competition'' in the airline industry, Lofgren said. ''And I'm not seeing how this merger is going to make the competitive situation any better.''

The chiefs of United and US Airways, as well as Black Entertainment Television founder Robert L. Johnson, who plans to run a new airline created out of US Airways' operations at Washington's Reagan National Airport, did not directly answer Lofgren's question.

But they insisted before each panel that the deal was necessary for the airline to flourish in a tough international marketplace.

They also promised it would enhance competition, noting 93 new domestic and international nonstop flights are planned on routes where carriers like American and Delta now are dominant. And the merger would be better for consumers, they said, by providing access to a global network that would reduce travel hassle.

''I understand that not everyone sees it as I do,'' said James Goodwin, chairman and chief executive of UAL Corp., United's parent. ''But we welcome the scrutiny ... because we are convinced that those who are reviewing this merger will conclude as we have.''

He also repeated that, with over 600 million passengers flying last year, ''the vast majority go to their destinations safely and without major problems.''

The $4.3 billion merger proposal now is in the hands of the government. The Justice Department, with help from the Transportation Departments, will rule on whether the merger violates antitrust law.

Though Congress has no formal role in that decision, the clearly stated concerns from lawmakers in both parties no doubt will influence the decision.

And with consumers complaining about high prices in hub-airport cities and the Justice Department involved in lawsuits against American for allegedly driving a small competitor out of Dallas and against Northwest to force it to sell its controlling stake in Continental Airlines, the current climate is less than favorable.

If United and US Airways were to combine, the new entity would dwarf the current No. 2 airline, American. The two prospective partners had a combined $26.6 billion in revenue in 1999, compared with $17.7 billion for American.

In hopes of placating regulators, US Airways plans to sell the bulk of its operations at Reagan National Johnson, who will form DC Air, the nation's only black-owned airline.

That part of the deal has come under scrutiny from lawmakers who question whether Johnson has the resources to run an airline. But the most common concern among lawmakers is of the merger creating a domino effect ending with just three major U.S. carriers.

Already, there have been reports of merger talks between Northwest Airlines and American Airlines. Industry analysts have also suggested that Delta would fit well with Continental.

And if that kind of consolidation occurs, lawmakers said it seems inevitable consumers will suffer.

''I have serious concerns about the competitive impact of this merger,'' Judiciary Chairman Henry Hyde, R-Ill. said. ''I don't see where it adds much.''

On the Net: http://www.united.com

http://www.usair.com

http://commerce.senate.gov