Oberstar: Airline industry needs more regulation

The Department of Justice's decision Friday to approve the merger of Continental and United Airlines shows Congress needs more authority over airlines to prevent further consolidation at the expense of consumers, according to House Transportation Committee chairman James Oberstar (D-Minn.).

Oberstar has been a harsh critic of the proposed merger; at a June hearing he accused the companies' executives of hating competition and attempting to dominate the market. In a statement issued Saturday he indicated he will follow through on his promise to seek re-regulation of the airline industry in response to the deal.

"When Congress deregulated the airlines in 1978, we were promised better service, added competition and more choices for consumers. With the United-Continental merger, our domestic carrier fleet will have shrunk to four network carriers," Oberstar said. "Can a US Airways-American Airlines merger be far behind?"

Oberstar said consolidation in the airline industry usually leads to fewer choices, reduced levels of service and increased prices. He also said lawmakers in 1978 did not foresee a global airline market dominated by three international alliances.

"That runs directly counter to the promise of deregulation. I believe it may be time for Congress to rethink its vote in 1978," Oberstar said.

DOJ's examination of the merger turned up concerns regarding routes between United's existing hubs and Continental's hub at Newark. The companies agreed to transfer some takeoff and landing slots to Southwest Airlines to allay the concerns. With that potential antitrust violation removed, Oberstar said Justice believed it had no legal grounds on which to oppose the transaction.

"This action points strongly to the need to give broader authority over such mergers to the Department of Transportation, allowing DOT to consider such factors as the impact a merger will have on service to communities and customers, as well as the effect the merger could have on the industry as a whole," Oberstar said.