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Tough Questions Surface at USAirways/AMR Merger Hearing

Stocks in this article: AAMRQ.PK DAL LCC

Several witnesses suggested fares will rise. "Last year, there were 15 proposed fare hikes, and eight were rejected by one or two carriers," said Kevin Mitchell, chairman of the Business Travel Coalition. "The probability that they will be rejected goes way down." Holding said it costs less to fly from Raleigh-Durham to Washington Reagan National Airport than it does to fly from Charlotte to National.

"Do you anticipate that fares would go up significantly in the future on Raleigh-Durham to Washington?" Holding asked Johnson, who responded that the airlines have not yet developed new fares. Raleigh/Durham to National is one of just 12 routes, out of the combined 900 they serve, where American and US Airways offer competing service

Johnson insisted the industry will remain competitive. "There will be four big airlines, each with 25% market share, each with a national network, all competing with each other," he said. The merger benefits US Airways employees, already promised annual wage improvements of $400 million because they will work for an airline serving more lucrative routes. "By merging, we can pay our employees more," Johnson said. As for customers, "they don't talk to us about prices," he said. "They talk to us about finding ways to grow the hubs, to create more destinations."

While Rothus decried the de-hubbing of Pittsburgh, which once had 500 daily US Airways departures but now has 41, Rep. Steve Cohen, D.-Tenn., blasted the downsizing of Delta's Memphis hub.

"The unions have expressed strong support for this merger, and that's encouraging, but the Delta/Northwest merger negatively shaped my view of airline mergers," Cohen said. He referred to Delta CEO Richard Anderson's 2008 assertion to the subcommittee that Memphis International Airport would benefit from the merger. Instead, Cohen said, Delta's daily Memphis departures fell to 96 flights today from 244 earlier. Anderson "testified there would be no hub closures, said Memphis-Amsterdam would be maintained and Memphis-Paris was going to happen," he said, noting that all three statements proved false.

"Any comments that were made were related to the effect of the merger, not to the economic environment going forward," said Delta spokesman Anthony Black, in an interview. He said Delta's fuel costs have grown by $3 billion annually since 2009, even though the airline uses less fuel. "The decisions were based on the need to right-size markets, particularly hubs," he said. "That included in a lot of cases targeting routes that were underperforming." Memphis was vulnerable because much of Northwest had served the city with relatively inefficient regional jets.

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