Global Airport News
Senior executives of United Airlines and Continental Airlines sparred with irritated US lawmakers on Wednesday over their planned merger, drawing a threat for closer industry regulation if the deal goes through.
United's Glenn Tilton and his counterpart at Continental, Jeff Smisek, received a frosty reception from the House of Representatives aviation subcommittee, and faced the sharpest public questioning yet on specifics of the deal.
They later appeared before the House Judiciary Committee where members raised similar questions about service, job protection and competition in an industry that is consolidating at the top and fragmented at the bottom.
"United and Continental are repeating a strategic move that many airlines before them have made that has brought sustained success to none," said Representative James Oberstar, who as Transportation Committee chairman is influential on aviation matters.
Oberstar, who says the United/Continental deal will harm competition and raise fares, said he would explore legislation to stiffen regulation if the deal is approved. Oberstar voted for airline deregulation 30 years ago, but said he did not envision an industry of mergers and mega-carriers.
"When I cast my vote, I expected the antitrust laws to be vigorously enforced, as did others," said Oberstar, whose home-state airline, Northwest, merged with Delta Air Lines in 2008. He also opposed that deal.
If the deal is approved by antitrust officials at the Justice Department, United/Continental operating as new United would join Delta and American Airlines as the three largest domestic US carriers. They would hold a combined 35 percent share of the market and new United would command about half of that.
Tilton and Smisek told the aviation and judiciary panels that the merger was necessary to compete effectively with American, Delta, Germany's Lufthansa, and Air France-KLM.
"This is a brutally competitive industry. It is today and will be after this merger," Smisek said.
Congress cannot block the merger. The US has approved two big mergers and several alliances since 2005.
The Senate Commerce Committee will review the United/Continental proposal at a hearing on Thursday.
At the tense transportation subcommittee hearing on Wednesday, Representative Dennis Kucinich of Ohio, which some experts say could be vulnerable to job and service cuts as a result of the merger, said he would investigate Continental's marketing alliance with United.
Kucinich, who chairs the domestic policy subcommittee, questioned why Continental would tell regulators in 2009 they did not want to merge and reverse the decision a year later.
"It is easy to see that the merger was Continental's plan all along," Kucinich said.
Northwest and Delta also forged an alliance before their merger. Continental backed out of merger discussions with United two years ago over concerns about United's finances, which have since improved.
Tilton and Smisek tangled with Representatives John Garamendi and John Boccieri over safety, including outsourcing some United maintenance work to China.
Smisek was grilled on pilot training following the February 2009 midair stall and crash of a plane operated by Continental regional partner Colgan Air near Buffalo that killed 49 people. Family members of some of the victims of Flight 3407 attended the hearing.
Smisek called the crash tragic and regrettable, and said Continental was not aware that the pilots of the ill-fated aircraft were undertrained, as US crash investigators concluded.
Smisek said individual airlines should ensure safe operations, but training oversight industrywide is the responsibility of the Federal Aviation Administration.
