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Oberstar Questions UA/CO Approval & Deregulation  
User currently offlineenilria From Canada, joined Feb 2008, 7673 posts, RR: 15
Posted (4 years 3 months 3 weeks 8 hours ago) and read 4571 times:

http://transportation.house.gov/News/PRArticle.aspx?NewsID=1306

The Justice Department’s antitrust decision is regrettable, and, while I am disappointed with the ruling, I understand that the Department believed it had little choice.
The Justice Department concluded that it had to base its decision on a very narrow set of criteria to determine whether the merger would violate existing federal antitrust laws. The Department’s examination of the merger proposal turned up problems with market domination on routes between United’s existing hubs and Continental’s hub at Newark. However, when Continental announced a deal to transfer slots and other assets at Newark to Southwest Airlines, the potential antitrust violation was removed and Justice believed that it had no grounds on which to object to the merger.

This action points strongly to the need to give broader authority over such mergers to the Department of Transportation, allowing DOT to consider such factors as the impact a merger will have on service to communities and customers, as well as the effect the merger could have on the industry as a whole. There must be consideration of whether a merger will inevitably trigger others, ultimately reducing the industry to a few large carriers, each of which is unwilling to compete seriously in markets dominated by one of the others.

...

This consolidation of the mainline companies into three or four mega-carriers is not what I voted for in 1978. Nor did anyone foresee three international alliances dominating the global airline market.

Airline consolidation brings consumers and communities fewer choices and less competition, usually leading to increased fares and reduced levels of service. That runs directly counter to the promise of deregulation.

I believe it may be time for Congress to rethink its vote in 1978.


36 replies: All unread, showing first 25:
 
User currently offlinemetjetceo From United States of America, joined Jun 2007, 412 posts, RR: 1
Reply 1, posted (4 years 3 months 3 weeks 7 hours ago) and read 4542 times:

Quoting enilria (Thread starter):
Airline consolidation brings consumers and communities fewer choices and less competition, usually leading to increased fares and reduced levels of service. That runs directly counter to the promise of deregulation.

I would question what the brilliance prior to 1978 offered these same communities in the way of price and selection.


User currently offlinedctennis From United States of America, joined Aug 2008, 6 posts, RR: 0
Reply 2, posted (4 years 3 months 3 weeks 7 hours ago) and read 4511 times:

i usually avoid politics like the plague but i have to wonder....was sen. oberstar objecting to the delta/northwest merger like this??? i don't remember ever hearing him denounce that merger....maybe because it invoived an airline in his home state....but this is all just my opinion....

User currently offlinePPVRA From Brazil, joined Nov 2004, 8974 posts, RR: 39
Reply 3, posted (4 years 3 months 3 weeks 7 hours ago) and read 4425 times:

Quoting enilria (Thread starter):
Airline consolidation brings consumers and communities fewer choices and less competition, usually leading to increased fares and reduced levels of service. That runs directly counter to the promise of deregulation.

Mergers have been happening throughout the history of airlines in the United States with the exact opposite effect. Except for "on board service" I suppose, but that was during the time few could afford to travel. And that's where Mr. Berard wants to take us back to.



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineUnited1 From United States of America, joined Oct 2003, 6131 posts, RR: 9
Reply 4, posted (4 years 3 months 3 weeks 7 hours ago) and read 4371 times:

Quoting dctennis (Reply 2):
was sen. oberstar objecting to the delta/northwest merger like this???

He was completely against NW/DL as well...



Semper Fi - PowerPoint makes us stupid.
User currently offlineMasseyBrown From United States of America, joined Dec 2002, 5598 posts, RR: 7
Reply 5, posted (4 years 3 months 3 weeks 7 hours ago) and read 4338 times:

Quoting dctennis (Reply 2):
.was sen. oberstar objecting to the delta/northwest merger like this??? i don't remember ever hearing him denounce that merger..

Rep. (not Sen.) Oberstar huffed and puffed but DL ignored him, just as UA will in this case. The airlines are not looking for anything from Congress at the moment, and Oberstar isn't in a position to do anything more than hold a hearing or two.



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineenilria From Canada, joined Feb 2008, 7673 posts, RR: 15
Reply 6, posted (4 years 3 months 3 weeks 7 hours ago) and read 4323 times:

Quoting metjetceo (Reply 1):
I would question what the brilliance prior to 1978 offered these same communities in the way of price and selection.

Well, in those days places like Chattanooga had mainline service to Chicago...not because the market justified it, but because CAB required an intermediate stop from ATL (if I got the details of that example slightly off please forgive me). So it is fair to say that in many cases tiny towns had much better service than they deserved and would ever get in a free market.

IMHO, fixing deregulation has nothing to do with small communities and everything to do with fixing the hubs and slot restricted airports which are a competitive trainwreck.

Quoting dctennis (Reply 2):
was sen. oberstar objecting to the delta/northwest merger like this???

My memory is that he was peeved about the big loan NW loan that DL basically defaulted on from the State of Minnesota. I *THINK* that he has been pretty consistently pro-competition.


User currently offlinePPVRA From Brazil, joined Nov 2004, 8974 posts, RR: 39
Reply 7, posted (4 years 3 months 3 weeks 7 hours ago) and read 4277 times:

Quoting enilria (Reply 6):
IMHO, fixing deregulation has nothing to do with small communities and everything to do with fixing the hubs and slot restricted airports which are a competitive trainwreck.

Traffic is more complex than that. Airlines are one third of the problem, the other is how airports and airspace are managed. No deregulation in the latter two areas which account for two-thirds of the issue.

edit: and the three influence each other greatly

[Edited 2010-08-30 12:26:11]


"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17821 posts, RR: 46
Reply 8, posted (4 years 3 months 3 weeks 5 hours ago) and read 4119 times:

Quoting enilria (Thread starter):
This consolidation of the mainline companies into three or four mega-carriers is not what I voted for in 1978.

Great. We'll just double fares tomorrow, layoff half the (heavily unionized) industry, put a piano bar in the back of the plane, and go right back to 1978.



E pur si muove -Galileo
User currently offlinelonghaulheavy From United States of America, joined Dec 2003, 402 posts, RR: 2
Reply 9, posted (4 years 3 months 3 weeks 2 hours ago) and read 3920 times:

Quoting United1 (Reply 4):
He was completely against NW/DL as well...

Indeed. Voters are never happy when their hometown airline gets gobbled up.


User currently offlineAAExecPlat From United States of America, joined Sep 2009, 636 posts, RR: 4
Reply 10, posted (4 years 3 months 3 weeks 1 hour ago) and read 3841 times:

With all the issues our country faces, this is an issue our elected representatives fret about. It boggles the mind.

[Edited 2010-08-30 17:46:42]

User currently offlineCALPSAFltSkeds From United States of America, joined exactly 8 years ago today! , 2723 posts, RR: 9
Reply 11, posted (4 years 3 months 2 weeks 6 days 22 hours ago) and read 3683 times:

I hope Oberstar gets the boot in the November election and gets an ANet Premium membership so he can continue being an armchair Airline CEO.

User currently offlineAntoniemey From United States of America, joined Dec 2005, 1607 posts, RR: 4
Reply 12, posted (4 years 3 months 2 weeks 6 days 22 hours ago) and read 3662 times:

Quoting CALPSAFltSkeds (Reply 11):
I hope Oberstar gets the boot in the November election and gets an ANet Premium membership so he can continue being an armchair Airline CEO.

Maybe he already has one?  

At least we know someone's paying attention, even if all they're doing is making unnecessary noise.



Make something Idiot-proof, and the Universe will make a more inept idiot.
User currently offlineBMI727 From United States of America, joined Feb 2009, 15831 posts, RR: 27
Reply 13, posted (4 years 3 months 2 weeks 6 days 22 hours ago) and read 3659 times:

Quoting enilria (Thread starter):
Airline consolidation brings consumers and communities fewer choices and less competition, usually leading to increased fares and reduced levels of service. That runs directly counter to the promise of deregulation.

The people got what they wanted: rock bottom fares. They've been willing to drive to airports further away, give up things like blankets and meals, and pay for checking bags. But that is what the people have voted for with their wallets. And for those that want more, first class is waiting.

Quoting enilria (Thread starter):
This consolidation of the mainline companies into three or four mega-carriers is not what I voted for in 1978.

Well, if he votes to stop consolidation, then he will probably have to deal with some airline bankruptcies further down the line. The fact is that there is overcapacity in the market and it cannot last. The overcapacity will be rectified in one of two ways: voluntary consolidation in the form or mergers or involuntary bankruptcies and failures. Unless Mr. Oberstar is willing to subsidize failing airlines to allow unsustainable fares to continue, there is nothing he can do to stop capacity contraction.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinecatiii From United States of America, joined Mar 2008, 3091 posts, RR: 4
Reply 14, posted (4 years 3 months 2 weeks 6 days 22 hours ago) and read 3636 times:

Quoting enilria (Thread starter):
Oberstar Questions UA/CO Approval & Deregulation

In other news, the sun rose in the east today...  
Quoting BMI727 (Reply 13):
Well, if he votes to stop consolidation,

There's no mechanism by which he can do so.

Quoting longhaulheavy (Reply 9):
Voters are never happy when their hometown airline gets gobbled up.

But here's the thing: aside from losing admin and HQ jobs, what negative impacts did MSP see?

[Edited 2010-08-30 21:20:43]

User currently offlineMasseyBrown From United States of America, joined Dec 2002, 5598 posts, RR: 7
Reply 15, posted (4 years 3 months 2 weeks 6 days 21 hours ago) and read 3594 times:

Quoting CALPSAFltSkeds (Reply 11):
I hope Oberstar gets the boot in the November election

Not likely. It's a very safe Democratic district; Oberstar regularly gets over 70% of the vote. His advancing age (76) in September will take him out of office before the voters do.



I love long German words like 'Freundschaftsbezeigungen'.
User currently offlineBMI727 From United States of America, joined Feb 2009, 15831 posts, RR: 27
Reply 16, posted (4 years 3 months 2 weeks 6 days 21 hours ago) and read 3581 times:

Quoting catiii (Reply 14):
There's no mechanism by which he can do so.

Directly, no. He could try and push for tougher anti-trust laws though.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinemayor From United States of America, joined Mar 2008, 10645 posts, RR: 14
Reply 17, posted (4 years 3 months 2 weeks 6 days 21 hours ago) and read 3556 times:

Quoting enilria (Thread starter):
This consolidation of the mainline companies into three or four mega-carriers is not what I voted for in 1978. Nor did anyone foresee three international alliances dominating the global airline market.

Airline consolidation brings consumers and communities fewer choices and less competition, usually leading to increased fares and reduced levels of service. That runs directly counter to the promise of deregulation.

No Rep. Oberstar, but this is exactly what most airlines warned you would happen. Be careful what you wish for.

Quoting enilria (Reply 6):
My memory is that he was peeved about the big loan NW loan that DL basically defaulted on from the State of Minnesota. I *THINK* that he has been pretty consistently pro-competition.

Except DL didn't "default" on the loan.....they restructured it and it wasn't with the State of Minnesota, but the authority over the airports in Minnesota (please correct me if I'm wrong, here). IIRC, no state monies were involved with this "loan" but proceeds from the sale of bonds. No tax monies were involved.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlineSHUPirate1 From United States of America, joined Sep 2003, 3670 posts, RR: 16
Reply 18, posted (4 years 3 months 2 weeks 6 days 21 hours ago) and read 3532 times:

Quoting MasseyBrown (Reply 15):

Not likely. It's a very safe Democratic district; Oberstar regularly gets over 70% of the vote. His advancing age (76) in September will take him out of office before the voters do.

I wouldn't say that (Cook Partisan Voting Index is +3)...just that Oberstar is very popular.



Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
User currently offlinedeltal1011man From United States of America, joined Sep 2005, 9700 posts, RR: 14
Reply 19, posted (4 years 3 months 2 weeks 6 days 21 hours ago) and read 3528 times:

Quoting dctennis (Reply 2):
i usually avoid politics like the plague but i have to wonder....was sen. oberstar objecting to the delta/northwest merger like this??? i don't remember ever hearing him denounce that merger....maybe because it invoived an airline in his home state....but this is all just my opinion....

No he was 2x upset.....why? the HQ moving.

Quoting MasseyBrown (Reply 5):

Rep. (not Sen.) Oberstar huffed and puffed but DL ignored him, just as UA will in this case. The airlines are not looking for anything from Congress at the moment, and Oberstar isn't in a position to do anything more than hold a hearing or two.

pretty much....at this point he is all talk, and cant do anything about it.

Quoting enilria (Reply 6):

My memory is that he was peeved about the big loan NW loan that DL basically defaulted on from the State of Minnesota. I *THINK* that he has been pretty consistently pro-competition.

kind of. NW signed a loan with the MAC but part of the deal was that NW had to keep its HQ in MN. Well part o fthe Delta merger was move the HQ to Atlanta, and he wasn't happy about this, but Delta/MAC reworked the loan, with Delta promising to keep like 200 ML flights at MSP.

Quoting mayor (Reply 17):

Except DL didn't "default" on the loan.....they restructured it and it wasn't with the State of Minnesota, but the authority over the airports in Minnesota (please correct me if I'm wrong, here)

nope your right, but he was upset about the moving of the HQ but he has always been against mergers.



yep.
User currently offlinecatiii From United States of America, joined Mar 2008, 3091 posts, RR: 4
Reply 20, posted (4 years 3 months 2 weeks 6 days 12 hours ago) and read 3377 times:

Quoting BMI727 (Reply 16):
Directly, no. He could try and push for tougher anti-trust laws though.

Which can't be applied retroactively, and thus are a moot point for these mergers. Also, unlike say if he were chairman of the Judiciary Committee, from where he sits he's really not in a position to influence anything under that Committee's jurisdiction. Now if he were in the Senate it would be a different story.


User currently offlineBoeing1970 From , joined Dec 1969, posts, RR:
Reply 21, posted (4 years 3 months 2 weeks 6 days 11 hours ago) and read 3318 times:

Quoting enilria (Thread starter):
I believe it may be time for Congress to rethink its vote in 1978.

I think it’s time for Oberstar to retire. The fact that he doesn't see that the industry by way of mergers is in effect self regulating shows his lack of competence on the subject matter. There simply isn't room for 20 or 30 carriers, let alone 10.

I mean really, does anyone think for a split second there would be more than 3 or 4 carriers in a re-regulated operating environment?

Quoting BMI727 (Reply 13):
The overcapacity will be rectified in one of two ways: voluntary consolidation in the form or mergers or involuntary bankruptcies and failures.

With systemwide load factors over 80%, there isn't an over capacity problem.

[Edited 2010-08-31 08:31:06]

User currently offlineenilria From Canada, joined Feb 2008, 7673 posts, RR: 15
Reply 22, posted (4 years 3 months 2 weeks 6 days 10 hours ago) and read 3253 times:

Quoting mayor (Reply 17):
Except DL didn't "default" on the loan.....they restructured it and it wasn't with the State of Minnesota

They did default because the loan said the HQ had to remain in MN. After being put in default they negotiated a solution to keep X number of jobs and X number of flights in the state.

Quoting mayor (Reply 17):
no state monies were involved with this "loan" but proceeds from the sale of bonds. No tax monies were involved.

Not totally true. The reason NW/DL used this financing method is because these bonds (which were backed by a governmental entity) had a much lower interest rate than anything NW could have gotten on their own. While government money wasn't used, if there had been a default by Delta it would have likely triggered the use of public funds.

Quoting deltal1011man (Reply 19):
kind of. NW signed a loan with the MAC but part of the deal was that NW had to keep its HQ in MN. Well part o fthe Delta merger was move the HQ to Atlanta, and he wasn't happy about this, but Delta/MAC reworked the loan, with Delta promising to keep like 200 ML flights at MSP.

See above


User currently offlineBMI727 From United States of America, joined Feb 2009, 15831 posts, RR: 27
Reply 23, posted (4 years 3 months 2 weeks 6 days 10 hours ago) and read 3203 times:

Quoting Boeing1970 (Reply 21):
With systemwide load factors over 80%,

But at what fares?



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinemayor From United States of America, joined Mar 2008, 10645 posts, RR: 14
Reply 24, posted (4 years 3 months 2 weeks 6 days 10 hours ago) and read 3200 times:

Quoting enilria (Reply 22):
Not totally true. The reason NW/DL used this financing method is because these bonds (which were backed by a governmental entity) had a much lower interest rate than anything NW could have gotten on their own. While government money wasn't used, if there had been a default by Delta it would have likely triggered the use of public funds.

I was talking about the loan that was negotiated by NW with the MAC. All DL did was re-negotiate that loan when it became apparent that it might go into default.

Most laymen were complaining about their "tax" monies being used in this transaction, when, at the time, tax monies were NOT being used.

Your statement that, "if there had been a default by Delta", sort of indicates that there was no default and DL re-negotiated the loan before that happened. DL was obviously not going to keep the HQ in MSP, so they knew they had to do something.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
25 DLPMMM : I don't know what you think "pro-competition" means. Oberstar has been consistantly for increased government regulation though. Incorrect. Delta was
26 Tango-Bravo : With all due respect, a strawman argument against regulation. Fares were steadily declining -- and had become affordable to most -- in the regulated
27 Post contains images United787 : IMHO, the US airline industry is finally reaching the point financial sustainability, 30+ years after deregulation...they have have reached this point
28 Cubsrule : That's an interesting point because Alfred Kahn - the architect of deregulation - is on the record against consolidation and thinks that consolidatio
29 DLPMMM : Considering that Kahn was a liberal Keynesian economist who was also Jimmy Carter's "Inflation Czar", I suppose he was an expert on "economic malaise
30 enilria : There was a technical default on the terms of the loan by announcing the closure of the HQ, but there was no default on the bonds that financed the l
31 Cubsrule : It depends on your perspective, doesn't it? Kahn thought that deregulation plus more aggressive antitrust enforcement would be both pro-consumer and
32 mayor : Isn't more aggressive antitrust enforcement, in itself, MORE regulatory?
33 Cubsrule : Not in the way we're using the word here.
34 AADC10 : There is an over capacity problem - there is more capacity than the market can support. Load factors are kept high by yield management but fares are
35 apodino : While I don't think Oberstar is the greatest congressman in the world, the concerns he raises are legit concerns that I think people on A.Net are too
36 GlobalCabotage : Is the system in the US perfect? No. Is government regulation the answer? No. The free market will work. The weak carriers will fail, and the strong w
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