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The Honorable Joel I. Klein
Assistant Attorney General
Antitrust Division
U.S. Department of Justice
Tenth Street and Constitution Avenue, NW
Washington DC 20530
Dear General Klein:
Consumers Union, the nonprofit publisher of Consumer
Reports magazine and Consumer Reports Travel Letter, urges
the Department of Justice to conduct a painstaking review of the
proposed merger between the largest domestic air carrier, United
Airlines, and USAirways. Unless specific problems related to routes
where United and USAirways currently compete, and hub airports where
they can limit competition through their domination over facilities
are fully addressed, we believe the Department should reject this
merger as contrary to the consumer interest in lower prices, better
service and more choices.
In a business that is already far from competitive in terms of
both structure and conduct, this merger presents an enormous
potential for even less competition. Promises of short-term ticket
price freezes cannot overcome consumers' concerns about long-term
competition in air passenger service.
We have four specific areas of particular concern. The
Department's investigation should address all four.
First, either United or USAirways is the dominant carrier at
eleven major hub airports: Chicago O'Hare, New York Laguardia, Los
Angeles, San Francisco, Washington Reagan National, Washington
Dulles, Denver, Boston, Philadelphia, Pittsburgh, and Charlotte.
What effect will the merger have on control of these hubs and
competition on the many routes they connect?
Second, will the divestitures that would be required in order to
assure at least the current degree of competition on each of those
routes result in a transfer of assets to new or existing carriers
that have the resources and the management ability to compete
effectively?
Third, what will the new national carrier network look like after
the merger and will other carriers be in a position to compete
effectively to at least the current degree of competition.
And fourth, will the merger add substantially to price competition
and passenger service?
Unless these questions can be answered in a satisfactory manner,
consumers face a reduction in price competition and passenger service
from an already unsatisfactory situation. We would appreciate the
opportunity to provide you with additional information relevant to
the Department's investigation of this proposed merger.
We look forward to your response and to the outcome of you
investigation.
Sincerely,
Mark Silbergeld
Co-Director
Washington Office
