Top executives of United and Continental airlines sparred with U.S. lawmakers Wednesday over their merger plan, drawing a threat for closer industry regulation if the deal is approved.
United Chief Executive Glenn Tilton and his counterpart at Continental, Jeff Smisek, received a frosty reception at House Transportation and Judiciary committee hearings and faced the sharpest public questioning yet on their proposal to create the world's biggest airline.
"United and Continental are repeating a strategic move that many airlines before them have made that has brought sustained success to none," said Rep. Jim Oberstar, D-Minn., who as Transportation Committee chairman is influential on aviation matters.
Oberstar, who believes the United-Continental deal will harm competition and raise fares, said he would explore legislation to stiffen regulation if the deal is approved. Oberstar voted for airline deregulation more than 30 years ago but said he did not envision an industry of mergers and megacarriers.
"When I cast my vote, I expected the antitrust laws to be vigorously enforced, as did others," said Oberstar, whose home-state carrier, Northwest Airlines, merged with Delta Air Lines in 2008. He also opposed that deal.
If the United-Continental deal is approved by the Justice Department, the combined carrier operating as United would join Delta and American Airlines, a unit of AMR Corp., as the three largest domestic U.S. carriers. They would hold a combined 35 percent share of the market, and United would command about half of that.
Tilton and Smisek told the aviation and judiciary panels the merger was necessary to compete effectively with American, Delta, Air France/KLM and Germany's Lufthansa.
"This is a brutally competitive industry. It is today and will be after this merger," Smisek said.
Congress cannot block the merger but can pressure regulators and influence public opinion. The U.S. has approved two big mergers and several alliances since 2005.
The Senate Commerce Committee will review the United-Continental proposal at a hearing Thursday.
While pilots expressed support for the merger Wednesday, the loudest complaints from lawmakers generally came from those whose states or districts may be negatively affected.
They included Rep. Dennis Kucinich of Ohio and Judiciary Committee member Rep. Ted Poe of Texas, who praised Continental for its service but was less impressed with United. Poe told Tilton that he would rather travel by stagecoach than fly his airline.
Continental, which is headquartered in Houston, would shift its executive operation to Chicago, where United is based.
At the transportation panel hearing, Kucinich appeared as a witness and said he would investigate Continental's marketing alliance with United.
Kucinich, who heads the domestic policy subcommittee, questioned why Continental would tell regulators in 2009 it did not want to merge with United and then do so a year later. Kucinich represents Cleveland, a Continental hub that some say could lose jobs and service.
Tilton and Smisek say they plan to grow the airline, not cut jobs or pare flights.
Northwest and Delta also forged an alliance before their merger. Continental decided not to merge with United two years ago over concerns about United's finances, which have since improved. United also has addressed service issues, which have long troubled the airline.
Tilton and Smisek also tangled with Transportation Committee members John Garamendi, D-Calif., and John Boccieri, D-Ohio, over safety, including outsourcing of some United maintenance to China.
Smisek was grilled on pilot training following the deadly crash of a plane operated by Continental regional partner Colgan Air in upstate New York in February 2009. Family members of some of the victims of Flight 3407 attended the hearing.
Smisek called the crash tragic and regrettable, and said Continental was not aware that the pilots of the plane were undertrained, as U.S. crash investigators concluded.
Smisek said individual airlines should ensure safe operations, but training oversight industrywide is the responsibility of the Federal Aviation Administration.
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