How A Merger Could Affect Congress’ Favorite Airport
Wednesday, June 19, 2013
If the US Airways-American Airlines merger announced earlier this year is approved, the combined airline would control two-thirds of the takeoff and landing slots at Reagan National Airport, outside Washington, D.C.
The government could force the airline to give up some of those slots as a condition of the merger. But lawmakers warn that could have consequences for some small- and medium-sized cities. And, not coincidentally, it could affect flight plans for lawmakers themselves.
Reagan National Airport is just a short taxi ride away from Capitol Hill. It's a standing joke that lawmakers are smelling the jet fumes as they rush out the door at the end of the week, heading for their flights home.
So it's easy to be skeptical about the letter signed by more than 100 lawmakers urging the Justice Department, which is reviewing the merger, to preserve the nonstop flights from Reagan National to small- and medium-sized airports across the country.
But Democratic Rep. Mike Michaud of Maine -- who has heard this before -- says it's really not about the lawmakers.
"It has nothing to do with lawmakers' convenience and everything to do with representing small communities that rely on these direct flights for economic benefits," Michaud says. "This is a bipartisan response to what we have heard from our constituents back home in the district."
Michaud represents Maine's 2nd District and lives about 65 miles from Bangor, which has three daily nonstops to the nation's capital.
Tony Caruso, director of Bangor International Airport, says those flights are pretty full.
"There's quite a bit of travelers. It's a good mix of both business and leisure travel," he says. "The load factor -- which is basically the number of seats sold on those aircraft -- they average over 80 percent. Certainly we think these flights are critical to the overall health and growth of, certainly, the Bangor region and Maine economy."
The Justice Department has forced airlines to divest themselves of slots as a condition of approving past mergers. At a Senate hearing on the proposed US Airways-American deal, Douglas Parker, the chairman and CEO of US Airways, warned that smaller cities will lose out if the combined airline has to give up slots at Reagan National.
"The slots that will be utilized by the new American are used to provide service to smaller communities that, if other airlines were given those slots, they would not go to similar-sized communities -- they'd be flown to larger markets," he said. "I think that'd be bad for consumers."
Parker said the new airline would likely give up its least profitable routes from Reagan National if it had to give up slots -- say, to places like Bangor -- and keep the slots for flights to more populous cities. And the airlines that won the new slots would not necessarily have to fly to the smaller cities either.
Diana Moss, director of the American Antitrust Institute, says this points to a problem with airline mergers.
"All of these legacy mergers are driving traffic to large hubs at the expense of service to smaller communities," she says. "I think this particular problem at National -- which is just one of multiple hubs that are affected by this -- I think this is where the rubber meets the road. Can you have a merger of this size with this competitive impact and still be able to fix it?"
Congress has a long history of involving itself in the workings of its favorite airport -- from long-haul flights to Phoenix instituted at the urging of Arizona Sen. John McCain to noise and late-night restrictions urged by members of the local Maryland and Virginia delegations.
Whether lawmakers can influence the process this time will soon become clear. The Justice Department is thought likely to rule on the proposed airline merger sometime this summer.
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