statement

US AIRWAYS / DELTA AIR LINES PROPOSED MERGER SHOULD BE STOPPED

BTC Calls On Congress to Legislate a 12-Month Merger Moratorium

GAO should study airline industry competitive structure

LONDON, ENGLAND., 22 January 2007–The Business Travel Coalition (BTC) today called for the U.S. Congress, State Attorneys General and U.S. Department of Justice to prevent the proposed US Airways takeover of Delta Air Lines from triggering a “tsunami” of airline industry consolidation most feared by business travel managers that could potentially reshape the global competitive landscape for several decades.

In combination with US Airways’ move, a potential merger between Continental and United would likely cause American Airlines, Northwest Airlines and Alaska Airlines to all make defensive merger moves. This realistic and profoundly anti-consumer development would suggest that DOJ and Congress shift from a one-off analysis of specific merger transactions and instead closely examine the future construct for domestic U.S. and international commercial aviation marketplaces under a rapidly accelerating industry consolidation scenario.

Overwhelming problems resulting from merger acceleration among these seven major network airline competitors, virtually all at once, would include (1) domestic U.S. airline industry concentration and significantly higher business airfares; (2) misaligned competitive structures in international aviation markets, including the exceedingly complex matter of impacts to alliance antitrust immunities; and (3) customer service disruptions into the next decade.

BTC chairman Kevin Mitchell stated, “DOJ can block the US Airways / Delta proposed merger while approving future proposals. However, approving this merger proposal would almost certainly require approval of additional near-term merger proposals. The US Airways / Delta proposal is nearly three time as toxic to competition and consumer interests and the 2000 United Airlines proposal to consume US Airways. The only other combination that would be more harmful to competition and the consumer would be United and American Airlines. As such, the short and long-term, and U.S. and global implications to industry competitive structure need to be fully understood before any major network airline merger proposal is given serious consideration.”

The Coalition calls on Congress to legislate a one-year moratorium on combinations among major U.S. network airlines and during such time request a General Accountability Office update of its year-2000 study of the airline industry competitive structure triggered by the United takeover proposal of US Airways. This would provide consumer advocates, Congress, State Attorneys General and DOJ a more informed context against which to evaluate such proposals.