WASHINGTON — Congressional committee leaders have sent a letter to Attorney General Eric Holder expressing concerns that the proposed settlement agreement with US Airways and American Airlines might hurt less populated and rural areas.
"We strongly encourage the Department of Justice and the [Department of Transportation] to take a more global view of the competition within the airline industry... and to ensure full consideration of the needs of small communities and rural states and regions throughout the process of settling the lawsuit and supervising the implementation of the settlement agreement," the lawmakers wrote.
The letter was sent to Holder and copied to Secretary of Transportation Anthony Foxx by Senate Commerce, Science and Transportation Committee Chairman Jay Rockefeller, D-W.Va., and ranking minority member John Thune, R-S.D., as well as House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa., and top Democrat Nick Rahall from West Virginia.
The proposed settlement, filed by the DOJ on Nov. 12, would resolve the lawsuit that the department and several states filed in August to block the airlines' merger. If the settlement is approved by a federal judge, it will clear the way for American to emerge from bankruptcy and repay its municipal bondholders.
The settlement would require the divestiture of 104 air carrier slots at Washington Reagan National Airport, 34 slots at LaGuardia Airport and gates at a few other airports in major cities. Additionally, through a side agreement between the airlines and the DOT, the merged airline would be required to use its commuter slots at Reagan to serve small hub, medium hub and non-hub airports to some degree for a limited time period.
However, the congressional leaders said, the side agreement does not require the merged airline to maintain existing service or service levels to any of the specific small communities currently receiving commercial air service.
"This agreement seems to do little to protect service to small communities and rural areas, and could very well reduce competition," they said.
The committee leaders also wrote that the process that the combined airline will use to divest its slots at airports "may further compound an already problematic situation for small communities."
Representatives of the two airlines and DOJ have publicly indicated that they expect all of the slots will be acquired by low cost carriers, or LCCs, which increase commercial air service to larger markets but generally do not provide service to smaller or rural communities.
The merger will eliminate head-to-head competition between US Airways and American on many non-stop and connecting routes. As a result, limiting which airline carriers can compete for the slots or gates to be divested "will almost certainly" eliminate competition for passengers who want to travel to many small and medium-sized destinations, even if it increases competition along some routes serving larger cities, the letter said.
"We understand that the department's focus is necessarily on the proposed merger's impact on competition," the lawmakers wrote. "We are concerned, however, that limiting carriers from the pool of potential acquirers of the slots and gates to be divested will harm competition and reduce overall network connections for consumers."
The lawmakers want DOJ to appoint a monitoring trustee who will oversee the divestitures in a way that supports competition to small and rural areas. While they expect many of the slots and gates to ultimately go to LCCs, they want the process for being awarded the gates and slots to be open to all carriers.
The congressional leaders asked Holder to provide them with answers to three questions by Nov. 26.
They are: 1) What steps will the DOJ take to make sure that competition across the national airspace system is not diminished by the merger? 2) Will the DOJ ensure that all airlines can compete for the slots and gates being divested? 3) Will the DOJ appoint a monitoring trustee who will oversee the divestiture and ensure that the process promotes competition and supports service to smaller communities and rural areas?
