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Justice Urged to Delay Airline Mergers Review
By Jesse J. Holland   Associated Press
WASHINGTON — A senator concerned that proposed airline mergers could lessen competition suggested Wednesday that the Justice Department delay reviewing the deals for nine months so it can study their effect on prices.

The freeze would not apply to American Airlines' proposed takeover of bankrupt TWA, which would save jobs and assets, said Sen. Charles Schumer, D-N.Y. But it would cover United Airlines' bid to obtain most of US Airways, and affect a Continental Airlines-Delta Air Lines merger, which reportedly is under discussion.

If those combinations go ahead, the new carriers would control three-fourths of the U.S. market.

"How in God's good name can having three airlines increase competition?" said Sen. Charles Schumer, D-N.Y., who long has complained about high airline prices in upstate New York.

At a Senate Judiciary Committee hearing on airline consolidation, Schumer said he planned to send a letter to the department's antitrust division asking for a nine-month moratorium on its review of airline mergers until the department can investigate their effect on ticket prices and flight schedules.

Several committee members already have asked the department to study the issue, though they did not seek a moratorium.

One such lawmaker, Sen. Mike DeWine of Ohio, said that during a hearing last year on the United-US Airways merger, "many of us noted that the most troubling aspect was the likelihood it would lead to further consolidation."

"Well, sure enough, here we are again, further proposed consolidation and other major airlines considering their growth options. I fear competition in the aviation market is at risk, and the result of that could be higher ticket prices for consumers," said DeWine, Republican chairman of the Judiciary Subcommittee on Antitrust, Business Rights and Competition.

Delta and Continental say they prefer to stay independent but would consider a merger or alliance if competitors' combinations are approved.

"Approval of the transactions under consideration must be viewed as tacit approval for those that follow," Delta's chief executive officer, Leo Mullin, told the committee.

If all the mergers go ahead, the committee's top Democrat said, the majority of the nation's air travel could be put at risk.

"The industry will be one work stoppage away from closing down one-fourth to one-third of America's air system," said Sen. Patrick Leahy of Vermont. "This prospect has become even more frightening when you read in the papers these days about potential labor strikes at four major airlines."

United, American and US Airways' chairmen said the mergers would increase competition by letting them expand their routes.

"So what does United believe the net effect of our proposed merger and these recent developments will be for consumers and competition?" said United chairman James Goodwin. "We believe domestic competition will be enhanced and consumer choice and connivence will be improved."

Smaller carriers not involved in merger talks spoke against the consolidations, saying the large airlines already had too much of a stranglehold on the market.

"Unchecked and unmodified, the pending agreements will stifle competition, raise fares and condemn hundreds of small and medium size communities to limited and high-cost air service for years," said Joe Leonard, chief executive officer of Air Tran Airways.


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