Schumer Raises Questions Over Troubling US Air/Delta Takeover; Deal Could Lead To Loss Of Flights And Service And Cause New Low Fares To Spike

Schumer Raises Questions Over Troubling US Air/Delta Takeover; Deal Could Lead To Loss Of Flights And Service And Cause New Low Fares To Spike

U.S. Senator Charles E. Schumer today raised serious concerns over the prospect of US Airways taking over Delta Airlines and the effects such a takeover would have on air fares and service across upstate New York. Schumer, who has long fought to increase competition within upstate air service as a way to bring down once sky high fares, sent a personal letter to US Air CEO Doug Parker asking six specific questions about how the takeover would affect service upstate. Over the past eight years, thanks to the introduction of low fare carriers such as JetBlue and Southwest, air fares have dropped significantly and led to a resurgence in air travel at upstate airports, large and small.

"This takeover could cast a huge shadow over upstate air service," Schumer said. "Bringing together two of the largest carriers would give this merged mega-company a stranglehold on markets across upstate and we could see fares begin to rise, and flights disappear. Over the past years, with the expansion of JetBlue and Southwest, New Yorkers in droves have realized the benefits of cheap and regular airfares. The US Airways-Delta merger could knock New York back onto the slippery slope of higher airfares and poorer service. I am going to take a long hard look at it before I decide how to proceed."

Last November, US Air made an initial bid to take over all of Delta Airlines holdings, operations, and infrastructure. Though the offer was originally rejected, US Air raised its offer last week by about 20 percent to $10.4 billion and set a February 1 deadline for the bankrupt carrier's creditors to support its bid. A combination of Delta and US Airways would create the nation's largest airline by passenger volume.

Schumer said that one of the primary factors that leads to an increase in fares is a decrease in competition among airlines in a given market. Both US Air and Delta have had significant presences at most upstate airports for decades. Several markets throughout New York State are serviced largely by both Delta and US Airways. In some cases, the dual-market share of these two airlines represents more than half of all flights. For instance, in Binghamton nearly 64% of all flights are Delta and US Airways. The combined market share is similarly high at other New York airports: Syracuse, 46.3%; Rochester 33%, Albany 33.5%; Buffalo roughly 31 percent and LaGuardia 44%. At some of the smaller airports, US Air may be the only major carrier providing scheduled commercial service.

In response to the growing momentum behind the takeover, Schumer today sent a personal letter to US Air CEO Douglas Parker laying out his concerns that the decrease in competition resulting from the takeover would adversely affect air fares and service upstate. Schumer wrote that, "When one air carrier dominates a market, fares can quickly become unaffordable. Several carriers in a market gives the flying public more options of when and where to fly and can lower ticket prices."

In his letter, Schumer spelled out six specific questions for Parker that relate to upstate air service including: what specific plans the airline has generated, if any, for air routes and ticket pricing in the New York State Air Market; what, if any, routes or flights the airline plans to reduce or increase at New York airports, especially in Binghamton, Syracuse, Rochester, Albany and Buffalo; and whether the airline plans to shrink ground, pilot and/or corporate personnel levels as result of this merger. Schumer has long led the effort - which has utterly transformed upstate air travel for businesses and consumers alike - to bring new, low cost carriers like Jet Blue and Southwest to Upstate New York. In 2001, Schumer led the fight to block the merger of US Airways and United Airlines citing the deleterious effect it would have on competition in the upstate air service market. In 2003, Schumer helped to pave the way for new low-fare service to Upstate New York by getting the Justice Department to block a hostile takeover of Independence Airline by Mesa Airlines. Schumer, a member of the Senate Judiciary Committee, urged the Justice Department Antitrust Division to investigate Mesa's attempt to determine whether the company was engaging in anti-competitive behavior. Mesa dropped plans for the takeover upon learning that the Justice Department was considering conducting an investigation, citing regulatory issues.

http://schumer.senate.gov/SchumerWebsite/pressroom/record.cfm?id=267716&&year=2007&