Key House and Senate lawmakers yesterday argued that the Delta-Northwest merger must be examined in the context of what the airline industry could look like if Delta-Northwest triggered a wave of industry consolidation.
In back-to-back hearings on Capitol Hill yesterday, Northwest CEO Douglas Steenland and Delta CEO Richard Anderson testified that the proposed merger would not fall afoul of antitrust laws. Steenland and Anderson testified in the morning before the House Judiciary committee's task force on antitrust and competition policy, and in the afternoon before the Senate Judiciary's subcommittee on antitrust, competition policy and consumer rights.
"We are concerned that this merger could result in a cascade of mergers," said Rep. John Conyers (D-Mich.), chairman of the Judiciary committee, who said he could foresee a future industry with "three major carriers competing with a handful of low-cost carriers." Conyers urged caution, questioning the rush to consolidate.
The competitive landscape has changed, with the rise of LCCs and with the liberalization afforded by such agreements as the U.S.-European Union open-skies deal, Anderson and Steenland argued. A merged carrier will be better able to compete against "large, well-funded foreign flag carriers" that are stepping up frequencies to the U.S., Anderson said.
Senate Judiciary Committee members echoed the concerns raised in the House. The effect of consolidation on air service to small and medium-sized cities needs to be examined, said Sen. Herb Kohl (D-Wis.), committee chair. Consumer choice must be preserved, he said, adding that he hopes choice “does not become as obsolete as airlines like TWA, Pan Am, Eastern, Braniff, ATA and now perhaps Northwest.”
Sen. Amy Klobuchar (D-Minn.), testifying before the Senate panel, said it is “essential” that the U.S. Transportation and Justice departments not consider this merger in a vacuum but in context of the aviation industry and of society as a whole.”
The reaction on the other side of the aisle in both houses was more supportive of the merger, although Republican lawmakers also stressed the need to consider further industry consolidation. Sen Orrin Hatch (R-Utah) argued that the merger may offer more connections for small and medium-sized cities.
Anderson and Steenland stressed that the merger will benefit employees and that no front-line workers will be let go in the process. Anderson said the merged carrier will “respect our employees’ preferences” on union representation.
Representatives from the International Association and Aerospace Workers and the Association of Flight Attendants testifed that the merger — and further industry consolidation — could ultimately impair workers’ rights to organize.
