Oberstar slams proposed United-Continental merger

WASHINGTON — Rep. Jim Oberstar today took aim at a proposed merger between United Airlines and Continental Airlines, saying their union into what would become the world’s largest airline would lead to less service, higher fares and pressures on other airlines to merge just to keep up.

In short order, Oberstar warned, American air service would be dominated by three “mega-airlines” — the new United, American and the current largest carrier Delta, which completed its merger with Northwest earlier this year.

“We cannot allow the reduction of the airline industry into three large carriers,” wrote Oberstar, the chairman of the House Transportation Committee, in a letter to Department of Justice officials who must eventually decide whether to approve the merger or decide to contest it in court.

“In this environment, the carriers will concentrate their efforts on fortress hubs and on the routes they dominate. There will be strong incentives to refrain from competition. There will be less service and fares will rise.”

(Read the entire letter here.)

Neither United nor Continental are major players in the Minnesota air travel market in the same vein as Delta, which has a hub at Minneapolis-St. Paul and services several out-state destinations. Both United and Continental service Minneapolis-St. Paul, while United also operates a daily flight from Duluth to Chicago-O’Hare.

The last time federal antitrust officials decided to contest a merger, in 2001, United and US Airways decided to drop their planned merger, rather than fight for it in court.

However, industry analysts note that precedent was set by the Delta-Northwest merger that ceding a few flights to other carriers can override objections about the size of a merged air carrier. Oberstar said such a solution would not be acceptable to him.

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