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Letter to The Honorable Michael P. Huerta, Administrator of the Federal Aviation Administration - Consider Regional Airports in Evaluating US Airways, American Airline Merger

Letter

By:
Date:
Location: Washington, DC

As the U.S. Departments of Transportation and Justice continue to review the proposed merger of US Airways and American Airlines, U.S. Senator Angus S. King, Jr. (I-ME) today sent a letter to Secretary of Transportation Ray LaHood, Attorney General Eric Holder, and the Administrator of the Federal Aviation Administration, Michael Huerta, urging them to carefully consider the impact that government imposed antitrust measures could have on mid-sized regional airports like Bangor International Airport.

By law, airlines seeking to merge -- like US Airways and American Airlines -- must demonstrate to both the Department of Transportation (DOT) and the Department of Justice (DOJ) that the merger will not substantially decrease competition or create a monopoly. If the federal agencies determine that the merger will have anticompetitive effects, they can then impose corrective measures, like a divestiture of calculated take-off times or "slots," as a condition for approval of the merger. These measures could ultimately result in a reduction or cancellation of service to regional airports like Bangor International Airport. US Airways currently operates two round-trip flights per day between Bangor International Airport and Ronald Reagan National Airport.

"As your competition and antitrust review of the American Airlines and US Airways merger continues, I urge you to consider the effect that forced slot divestiture will have on service to regional airports," Senator King wrote. "I stand with Bangor International Airport and other mid-sized airports throughout the country in their efforts to maintain airline service and the economic activity that such service facilitates."

The full text of the letter is as follows:

April 29, 2013

The Honorable Michael P. Huerta
Administrator
Federal Aviation Administration
800 Independence Avenue, SW
Washington, DC 20591

Administrator Huerta:

I write to express my concern regarding the possibility that the Departments of Justice and Transportation may force US Airways to divest some of its calculated take-off times ("slots") as a condition of approval for the pending merger of US Airways and American Airlines. Particularly, I worry that any forced divestiture of slots at Ronald Reagan Washington National Airport (DCA) could result in a reduction or cancellation of service to regional airports such as Bangor International Airport (BGR) in Maine.

As you know, airlines seeking to merge must demonstrate both to the Department of Transportation and to the Department of Justice that their merger will not substantially lessen competition or create a monopoly. The Department of Justice assesses the extent of likely anticompetitive effects in airline city-pair markets. Additionally, the DOJ considers the likelihood that other airlines entering these markets would counteract any anticompetitive effects that the potential merger would create.

Analysts have noted that the US Airways and American Airlines merger would have few anticompetitive effects due to the lack of overlap between the two airlines' routes. At DCA, for example, American and US Airways do not overlap on any routes except for Nashville and Raleigh/Durham. Other airlines serve both cities from nearby Dulles and Baltimore/Washington International Airports. Further, Jetblue and Southwest have shown a willingness to compete with American Airlines at DCA through their recent establishment of flights on routes that American serves from that airport. This action suggests that ample competitive opportunities remain for entrants to the DCA market.

Forced divestiture may not improve the competitive situation at airports like DCA. If the post-merger American Airlines is forced to divest slots at DCA, the company may still decide to maintain its dominant position on the Nashville and Raleigh/Durham routes. Instead of cutting flights on those routes to create more space for competition (as the DOT and DOJ intend), the new airline may cut flights to sparsely served destinations like Bangor International Airport in Maine.

As your competition and antitrust review of the American Airlines and US Airways merger continues, I urge you to consider the effect that forced slot divestiture will have on service to regional airports. I stand with Bangor International Airport and other mid-sized airports throughout the country in their efforts to maintain airline service and the economic activity that such service facilitates.

Sincerely,

ANGUS S. KING, JR.
United States Senator


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