Lawmakers endorse American-US Airways merger, raise parochial concerns

Washington DC
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Members of a House of Representatives panel endorsed the proposed American Airlines merger with US Airways in a hearing today, but raised concerns about changes in pricing and route structures of the combined carriers.

Lawmakers grilled two airline representatives - American Airlines senior vice president and general counsel Gary Kennedy and US Airways executive vice president for corporate and government affairs Stephen Johnson - on largely parochial concerns about the merger's impact.

Representative Steve Cohen says he intends to support the merger, but noted the impact on his district, which includes Memphis, Tennessee, by the combination of Delta Air Lines and Northwest Airlines in 2008. Despite prior assurances by Delta chief executive Richard Anderson, commercial flights at Memphis International Airport plummeted from more than 240 to 96 after the merger, Cohen says.

Both American and US Airways officials have maintained that they have no plans to close any of the nine domestic hubs of the merged carrier.

Another member of the witness panel, Brookings senior fellow of Economic Studies Clifford Winston, answered that it was difficult to separate the impact of the post-2008 global recession and the Delta-Northwest merger on demand in Memphis, but that, in general, airlines prefer to bypass such secondary airports in favour of the largest population centres to establish hubs.

"The problem with a place like Memphis is traffic," Winston says. "If you want to fill your plane with people, you want to go where the people are."

Still other lawmakers voiced concerns on particular routes and airports in their districts that could be impacted by the merger.

Two members of the House panel asked the airline representatives summoned to testify about frequencies and prices between Raleigh-Durham and Washington DC.

Johnson responded that he continues to see a "high level of service" between the two airports, but that the airlines have not yet discussed pricing changes as a result of the merger.

Johnson voiced similar support for continued service levels in Pittsburgh, where American and US Airways operate more than 50 frequencies combined, and in Miami, where the community has invested heavily to upgrade American's terminal.

Kennedy, meanwhile, defended the logic of the merged carrier's combined hub network, describing New York John F. Kennedy and Miami as major international gateways, Dallas-Fort Worth as an East-West connection point within the USA, and Charlotte as a north-south hub for the east coast. Kennedy did not specifically address American's existing hub at Los Angeles International and US Airways' hub in Phoenix, Arizona.