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Transportation Official Defends Airline Mergers

November 05, 1987|From Reuters

WASHINGTON — The wave of mergers among the nation's biggest airlines has not reduced competition in the industry, a high-ranking Transportation Department official said Wednesday.

"Our approval of mergers and acquisitions has been based on evidentiary records that show no likelihood of a substantial reduction of competition in any relevant markets," Assistant Transportation Secretary Matthew Scocozza told the Senate Commerce Committee.

Under the Reagan Administration, the department has approved all airline merger applications it has received, including one last week for USAir and Piedmont Aviation, which was opposed by one of its own hearing judges who feared it would reduce competition.

Other recent takeovers include TWA's purchase of Ozark, Delta's buying of Western, the merger of Northwest and Republic and the acquisition of Eastern, Frontier and People Express by Texas Air, which also owns Continental Airlines.

The Senate last week passed a bill that would transfer authority over airline mergers from the Transportation Department to the Justice Department.

"Merger after merger has been approved (by the Transportation Department), including those opposed on legitimate competitive reasons by the Justice Department," committee Chairman Ernest F. Hollings (D-S.C.) said.

Hollings said real airline competition for most passengers was extremely limited because more flights were being routed through hubs controlled by a few airlines.

But Scocozza said that the number of U.S. airlines had risen to 131 today from 39 before airline deregulation in 1978 and that discount fares were saving passengers $11 billion a year.

"This perspective reveals a very dynamic, highly competitive industry, not one tightly controlled and held by a limited number of parties intent on gouging the public and monopolizing a vital social and commercial transportation resource," he said.

Scocozza said flight delays had declined in each of the last three months and dropped 41% in September, compared to the same month last year.

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