Lawmakers fear American, US Airways merger will lead to hub closures

Lawmakers voiced concerns Tuesday that the merger between American Airlines and U.S. Airways will lead to reduced service or the closure of airports.

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The House Judiciary Committee is the first congressional panel to review the proposed $11 billion merger between the largest remaining stand-alone U.S. airlines. Their merger, which American initially resisted while pursuing an independent bankruptcy resolution, would create the nation’s largest airline.

American and U.S. Airways argue the combination would allow them to offer passengers a larger network of flight routes. Supporters say the deal would allow the two companies to compete better with rivals who have already merged.

“In 2001, American was the largest airline in the world,” American Airlines senior vice president Gary Kennedy told lawmakers on Tuesday. “With the mergers of Delta and Northwest, United and Continental, and Southwest and AirTran, American became the fourth-largest carrier domestically and dropped to the third largest carrier globally.”

The U.S. Air-American merger is the culmination of a trend of airline consolidation that began in 2008. If the deal is approved, the number of major airlines in the U.S. will cut in half from a high of as many as 10.

The deal is expected to win approval from federal regulators. The Department of Justice will have to confirm it doesn't violate antitrust laws, and the airlines will have to be certified to operate as a single entity by the Federal Aviation Administration.

Despite the sales pitch from American and U.S. Airlines officials, several lawmakers on the Judiciary Committee expressed concerns about the impact the merger would have on flight service to airports in their districts.

Members of both parties noted that previous airline mergers have resulted in reduced service and closures.

"Is it more convenient and nicer to be in the Memphis airport or the Atlanta airport?" asked Rep. Steve Cohen (D-Tenn.), referencing the 2008 merger between Delta and Northwest Airlines that resulted in fewer flight operations at Memphis International Airport.

"Memphis's airport is small. It’s easy to get around. It smells good. You smell ribs everywhere," Cohen joked. "Atlanta airport is just gigantic, and the only smell you get is maybe congestion."

Speaking more seriously, Cohen asked a panelist who supported the Delta-Northwest merger if he considered the “horrific conditions that would result in a city like Memphis” because of airline consolidation. 

Memphis was a large hub for Northwest Airlines before it merged with Delta, which uses Hartsfield-Jackson International Airport in Atlanta as a hub. Since the airlines combined, Delta has prioritized the Atlanta airport, which has always been a major focus of its operations, over the Memphis airport.

Other members said they too have seen airline mergers backfire on their districts. Rep. Keith Rothfus (R-Pa.) lamented U.S. Air's decision to stop using Pittsburgh International Airport as a hub after a previous merger.

"When Pittsburgh lost its hub status about 10 years ago, we dropped from over 500 flights to fewer than 50 and we lost thousands of jobs in the process, and a world-class airport remains under-utilized," Rothfus said. “It’s created an inconvenience for the traveling public and also for our business community to have not as many flights.”

Rep. Spencer Bachus (R-Ala.), however, defended the deal, arguing that it would be unfair to deny U.S. Airways and American after regulators allowed mergers between Delta and Northwest; United and Continental; and Southwest Airlines and AirTran Airways in recent years.

"You could've stopped those mergers before,” Bachus said. "But you didn't, and you created other airlines with a distinct advantage if you don’t let these two airlines merge.”

“Everything I’ve read [indicates] this is going to make a stronger airline."

Critics of airline consolidations argue that the merger will lead to higher airfares as the companies stop competing for passengers on routes they share and reduce service to some airports.

But Bachus said Tuesday that he could not “recall a merger of airlines that had fewer [route] duplications than this.”

“Airline fares, taking into account inflation, they’ve been as cheap as they’ve ever been,” he said.

However, most lawmakers on the panel raised concerns about how the merger would affect their home airports.

"I want to turn your attention from the delights of Memphis … to the most southern airport in our country, which is the Miami International Airport," Rep. Joe Garcia (D-Fla.) said to Kennedy. “We have a huge debt service at that airport, and part of it was making sure we have one of the best terminals for American Airlines.”

“Do you feel that we’re going to cut any flights there or are we going to increase traffic and help out our airport?” Garcia asked, telling Kennedy he needed a “specific” answer.

“This is not a small regional airport,” he continued. “This is in many ways the crown jewel of international travel to Latin America."

Kennedy told Garcia that he could not make any specific promises about the number of flights the merged airlines would fly to Miami but said the airline would remain “committed” to Miami.

“American Airlines is committed to Miami,” Kennedy said. “As you know, we have been for many years.”

Earlier in his testimony Tuesday, Kennedy told lawmakers that U.S. Air and American would learn from previous mergers in the industry.

"We are under no illusions that mergers are easy or seamless," Kennedy told the panel. "We have agreed from the outset to do everything in our power to learn from both the successes and mistakes of those who have gone before us."

The American Airlines executive acknowledged the frustration of lawmakers about previous mergers.

"I know that many members of Congress are skeptical of promises made in these situations and also concerned about industry concentration," Kennedy said. "As to the former, we do not intend to make commitments that we cannot keep. And as to the latter, it is clear that this merger does not create a high degree of concentration." 

Despite lawmakers’ serious concerns about the merger, many also joked about the merits of airports in their respective districts.

"Memphis may have the best barbecue and whatnot, but you'll never have an experience like you do when you go through Hartsfield-Jackson," Rep. Hank Johnson (D-Ga.) said, citing restaurants in the Atlanta airport that serve traditional Southern meals.

"I do love barbecue every once in awhile, but I can eat fried chicken every day," he said.

This story was updated at 4:05 p.m.