This is the oral statement delivered by Charlie Leocha, Director of the Consumer Travel Alliance before the U.S. Senate Subcommittee on Aviation Operations, Safety, and Security that focused on the merger of US Airways and American Airlines.
Chairwoman Cantwell, Ranking Member Ayotte and Members of the Subcommittee.
My name is Charlie Leocha, Director of the Consumer Travel Alliance.
We the Passengers thank you for a place at this hearing.
About three years ago, I sat before the full Commerce committee to discuss the merger of United and Continental. I re-read that transcript and noticed the same rationale for this merger, almost word for word.
But, this time, there are enormous differences.
During previous mergers the airline industry was under severe financial stress. Today, the airline industry is thriving. The two airlines sitting before you are in their best positions in years, even without any merger. Both can fly on their own wings — their CEOs have confirmed that.
We the passengers, need your careful examination of this merger from our point of view.
1. Competition will be clobbered.
A study done by the Consumer Travel Alliance shows that We the Passengers in 38 out of 50 states will lose significant airline competition. The GAO report released today is even more dramatic. On 1,665 connecting markets effective competition will be reduced.
2. Prices will go up.
In past mergers We the Passengers have faced price increases three times more than the norm where the airlines have any semblance of market control. Now, with fees, airlines have already acted.
Only last month the big four airlines raised the change fees from $150 to a whopping $200 — even when these two airlines were facing antitrust hearings and raking in record breaking profits.
We the Passengers have no power to even vote with our wallets when the legacy carriers up their fees in concert. These are the kind of avoricious fees that require competition, not more power for airlines.
3. Airports will suffer.
Overlapping routes also mean airports are in danger.
Airports, like Boston, Bradley, Seattle, San Francisco, Fresno, Minneapolis/St. Paul, Austin, San Antonio, Orlando and others are in danger of “right-sizing” — airline-speak for layoffs and service cuts.
Every Senator here will see her or his state lose competitive airline service and many airports in their states face layoffs as these airlines consolidate.
Some hub airports will be downsized. If I were from Arizona, North Carolina, Pennsylvania or Florida, I would never vote to approve this merger.
4. There are no significant benefits for consumers.
Most airline mergers claim big financial synergies or big benefits for We the Passengers. This merger does neither.
5. Passengers will suffer.
With every merger, massive computer glitches delay thousands and thousands of airline passengers. This merger will be the same.
On planes, American Airlines is already moving their seats closer together. This is what We the Passengers can expect to see.
Combining AA and US Air is bringing together two of the worst airlines for customer service according to the American Customer Satisfaction Study. Bad + Bad = worse. Not better.
Finally, labor issues will bog down the merger.
Any promises about labor peace are pie in the sky. And bad labor relations translates to bad customer service.
This merger will see coming labor unrest. After eight years, as this hearing takes place, USAir pilots are not integrated, and flight attendants just united a couple of months ago.
Within American Airlines, TWA flight attendants have been battling to reclaim their shamefully stolen seniority. Mr. Parker and the American Airlines flight attendant union should sort out this date-of-hire disgrace.
In conclusion —
• There are no overall benefits
• Consumers will dramatically lose competition
• Airfares will go up
• Airport service may be reduced.
• Consumers will suffer during the merger integration.
• There will be no magic union peace.
How many times does Congress, the government and the airlines have to do the same thing over and over expecting a different outcome. It is time to stop this merger madness and do what is best for consumers and the free market. We the Passengers are depending on you, our representatives.
Photo: Larry Downing, Reuters
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
