James Oberstar, Chairman of U.S. House Transportation Committee said on Wednesday that he opposes the ongoing merger talks between Northwest Airlines and Delta Air Lines. He said that any merger of major domestic carriers would only hurt consumers.
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Oberstar is a Minnesota Democrat and a key player in aviation policy. He said that the coalition of major domestic carriers would lead to a rapid collapse of the airline industry into two or three mega-carriers. He said, "I don't think mergers are in the best public interest, and that includes this one."
Speaking to reporters via a conference call Oberstar confirmed ongoing discussions between executives of Atlanta-based Delta, USA's No. 3 airline, and Minnesota-based Northwest which is ranked No. 6.
According to law, mergers between large airlines must go through investigation by the Department of Justice antitrust unit and the Department of Transportation. Oberstar said that he had invited executives of Northwest to his office on Tuesday to discuss the status of merger talks to avoid operating "on the basis of rumor." He added that the executives confirmed that initial stage talks were on with Delta.
Talks of a merger between the two carriers have not yet been publicly acknowledged by either Delta or Northwest.
Oberstar said that the executives told him that in case Delta was to move ahead with No. 2 United Airlines as a merger partner instead of Northwest, they would look for another partner. But currently Northwest is talking only with Delta about a possible merger.
Officials at American, currently the world's largest airline, said on Wednesday that consolidation of airlines would lead to a "more rational industry structure" which could benefit both consumers and the industry.
Tom Horton, CFO of American said that the complexity of putting together two airlines makes it difficult to achieve the desired results. He added that American is closely watching Delta's search for a possible merger partner and is contemplating what its competitive response, if any, would be.
U.S. Rep. Jerry Costello, a Democrat from United's headquarters state of Illinois and chairman of the House aviation subcommittee, issued a statement saying, "The history of these (merger) deals is not a positive one for consumers and airline employees." At the same time, Costello said, he'd review any proposed merger on its merits.