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Post date: February 28 2001

Spitzer, Schumer Unwilling To Sign Off On Us Airways-united Merger Unless Upstate Cities Are Protected

Attorney General Spitzer and Senator Charles E. Schumer said today that they will not sign off on the proposed merger of US Airways and United Airlines unless upstate cities are protected.

Among the possible remedies Spitzer and Schumer are looking at is for US Air to give up some of its landing slots and gates at La Guardia and National airports, opening the way for more competition on flights to New York, Washington, and several Western cities.

"Economics 101 tells us that competition is critical to keeping prices down," Spitzer said. "The Upstate economy is too important, and too fragile, to reduce competition when it comes to airline prices. Given the dramatic impact that airlines like JetBlue and Southwest have had on upstate airline prices, we can't afford to take a step back now."

As Attorney General, Spitzer has the authority under federal and state law to investigate and, if necessary, go to court to block mergers which could harm consumers by eliminating competition.

"Senator Schumer has been leading the fight for lower airfares and more competition for upstate cities, and has had significant successes over the last few years. I'm proud to join him in this fight," Spitzer continued.

According to a study by Spitzer's office, the proposed merger would have a significant anti-competitive impact on air service from Buffalo, Rochester, Syracuse and Albany to a number of important destinations, including New York and Washington, DC.

According to figures from Sen. Schumer's office, US Airways' control of the Washington-Upstate routes enables it to charge exorbitant fares for tickets, including $430 from Washington to Albany, $342 to Buffalo, $398 to Syracuse, and $358 to Rochester.

The new United Airlines being created from the merger would control between 40-60% of service from Upstate New York to seven Western destinations: Denver, Phoenix, San Diego, Los Angeles, Orange County, CA, San Francisco and Seattle. Currently, United, US Airways and American have fairly equal market shares of those destinations.

After the merger, however, there would only be two major competitors - United and American - with United being the dominant carrier. Spitzer and Schumer are concerned that this consolidation could result in higher fares for consumers.

"For way too long, Upstate air travelers have been at the mercy of major carriers like United and US Airways and this deal keeps them in control," Schumer said. "With the success of JetBlue and Southwest, we've come closer to creating a competitive atmosphere in the Upstate air market but this merger threatens to derail that effort. It's long past time to pave the way for low-cost carriers to land Upstate and allow local residents to reap the full benefits of competition."

Schumer and Spitzer detailed a number of steps that they believe will expand service to the region and rein in the high airfares that have crippled the Upstate economy, including giving some of United's landing and takeoff slots to low-cost air carriers, increased prosecution of predatory pricing practices and guidelines to curb anti-competitive behavior.

Schumer has called for a moratorium on airline mergers for at least nine months so that the US Department of Justice can study how the consolidation of the airline industry will affect competition, especially with respect to its effects on competition in smaller markets like Upstate New York, predatory pricing, and how airline hubs are affecting competition.

Both Spitzer and Schumer have met with top officials from the airlines involved in the process to raise their findings and concerns with them.