Congressman Spencer Bachus (AL-6) today held a hearing on the proposed merger between American Airlines and US Airways in his first hearing as chairman of the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law.
"The Judiciary Committee has a responsibility to examine the impact that significant mergers like this will have on consumers and competition in the marketplace, and I take that duty very seriously. Airline customers deserve the best information on the effect this merger could have on ticket prices, service routes, and overall competition in the industry," said Congressman Bachus.
Executives from American Airlines and US Airways were among the five witnesses who testified at the hearing. Proponents say the merger will create an airline comparable in market share to major U.S. carriers Delta, United, and Southwest and help enhance service to more than 100 airports, including airports in medium and small sized cities. The subcommittee also invited testimony from critics of the merger, who said it could lead to higher fares and greater industry concentration.
The proposal is subject to review by the U.S. Department of Justice and by several other regulatory and judicial entities in the U.S. and Europe.
Congressman Bachus said, "The case for this merger is persuasive. One question to examine is what might happen if the merger doesn't go through. Would we be left with financially weak airlines without the capital to make needed investments in service, personnel, and new aircraft? It is notable that, unlike some past mergers, this proposal has received strong support from many employees of the airlines, as well as their unions."
Bachus noted the importance of financially strong and viable airlines to airports like Birmingham-Shuttlesworth International Airport. A dedication ceremony is being held this afternoon to mark the completion of a $201 million terminal modernization project at the airport.
Congressman Bachus has rejoined the Judiciary Committee after being on leave during his Financial Services Committee leadership term and was appointed a subcommittee chair by Chairman Robert Goodlatte (VA).
Congressman Bachus' opening statement at the hearing follows.
STATEMENT OF CONGRESSMAN SPENCER BACHUS
SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL, AND ANTITRUST LAW
HEARING ON "COMPETITION AND BANKRUPTCY IN THE AIRLINE INDUSTRY: THE PROPOSED MERGER OF AMERICAN AIRLINES AND US AIRWAYS"
FEBRUARY 26, 2013
Let me call today's hearing to order.
By way of introduction, this is the first hearing of the year for the Subcommittee on Regulatory Reform, Commercial and Antitrust Law. Chairman Goodlatte has given me the great privilege of chairing this subcommittee. Under its antitrust jurisdiction, the Judiciary Committee has a duty to examine the competitive impacts of significant transactions on the marketplace. It is a responsibility that I take very seriously from the standpoint of consumer choice and the functioning of free markets.
Today's hearing is to specifically examine the proposed merger between American Airlines and US Airways. The resulting airline, with a 24 percent market share, would become the largest of what might be called the four "legacy" U.S. carriers.
The Department of Justice will conduct a detailed review of the proposed merger under the Hart-Scott-Rodino Act. There will be several other layers of scrutiny both here in the U.S. and in Europe. This hearing is intended to provide information to the public, not to state a subcommittee policy position.
The airline industry has been in a state of near-constant change and innovation since federal deregulation in 1978. We have a marketplace in which familiar names that I grew up with, like Pan Am and TWA, no longer exist. But we have also seen the emergence of new carriers with different business models like Southwest and Virgin. The embracing of electronic technology has created online booking and instant price comparison tools that have greatly benefited travelers by expanding choice. That is the competitive free enterprise system at work and it is the cornerstone of our economy.
However, there are questions that have naturally arisen during the airline mergers of recent years and today's hearing offers an appropriate forum to pose them. The issue that many consumers would be interested in knowing about, to the extent it can be answered, is the potential impact on their cost of flying. Service routes are also a concern as are the levels of service that will be offered post-merger at the current hubs of American and US Airways. From a broad competitive perspective, there is the issue of airline market share at individual airports, the overall market share held by major carriers, and the prospects and implications of future consolidation.
Our goal today is to facilitate discussion. Just as consumers are served by clear and transparent pricing when they shop online for a plane ticket, so are they served by good information and by comparing different points of views.
We welcome all of our witnesses and look forward to your testimony.