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By Mark Zdechlik
July 17, 2000
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RealAudio 3.0 |
Consultants to the Metropolitan Airports Commission say if American Airlines buys Minnesota-based Northwest, the Twin Cities would likely remain a hub. But they say there would be fewer flights and airfares would probably increase. The MAC has voted unaminously to oppose the United-US Airways deal which industry observers say would trigger consolidation throughout the airline industry.
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"You will not have, if this were to happen, a significant restructuring of the hub in my view. It is a very efficient, profitable hub and that's one of the things American would be paying for if it acquired Northwest," Ash said.
Ash told the commission the Twin Cities hub enables Northwest to charge nearly a third higher for tickets than the national average. He said a combined Northwest-American Airlines would face even less competition.
"You are now going to tie together some markets that were formerly competitive and that are now going to become monopolies or virtual monopolies."
While he said the hub would remain, the corporate headquarters would not - resulting in an undetermined number of job losses.
"One of the things you don't need is two presidents, two vice presidents, two senior vice presidents of finance. So there is always the potential in a situation like this for the loss of what we call headquarters or head office-type overhead jobs," Ash said.
Job cuts aside, it's the prospect of reduced competition that Ash said has got so many people speaking out agaist the possible mergers. He says there's pressure from Congress on federal regulators to block the United-US Air deal.
"I think what Congress in some respects is saying to the Justice Department is, 'You better look at this real close because if you don't we may.' I can't prejudge what the Justice Department will do but I think it's safe to say they will listen carefully to all the public interest entities that come to them."
After hearing the report, airports commissioners voted unamimously to oppose the United-US Airways deal and to ask that Minnesota's congressional delegation and the state Legislature do the same.
Commissioner Edward Fiori says Minnesota stands to lose too much if Northwest's operations are taken over by an even larger airline based somewhere else.
"We got to show a united front. This merger effect all of Minnesota. It actually effects all of the five-state region as well. And I think we have to get the congressional delegation behind us."
Consultant Jon Ash says he doens't think regulators will allow the consolidation, which most agree approval of a US Airways-United meger would trigger. He's predicting regulators will hold off on a decision until after the November elections, and possibly until well into next year.
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