Congressman Wants to Sink CO-UA Merger
If Congressman James Oberstar (D-MN) has his way, the much ballyhooed merger between Continental and United will be dead in the water.
Although Congress has no official role in approving the merger process, Oberstar, as the ranking Democrat and Chairman of the House Transportation and Infrastructure, is an influential figure.
Travel Weekly called his determination to stop the merger "unflinching," and while the Minnesotan failed in past bids to stop Delta from absorbing Northwest, Oberstar believes deeply that no merger is any good for the U.S. airline industry, or the flying public.
The Congressman has been called "obsessive" by some media sources in his opposition to mergers, saying that the consolidation of the airlines will result in fewer airlines, fewer routes, less service in non-hubs airports and rising prices; in effect, a monopoly of the air.
However, Darryl Jenkins, founder of The Airline Zone, says it would be dangerous to discount his influence.
The Justice Department, which rules on these kinds of antitrust immunity issues are after all, political appointees, and as a result, subject to influence by members of Congress, especially those with Oberstar's clout.
No one quite expected the regulatory review to be so seriously challenged, as decision makers weigh the merger's impact on competition and passenger fares, versus the need to fix the distressed airline system.
Oberstar said that if this merger is allowed to go forward, there will be immense pressure for the remaining airlines to consolidate leaving passengers with few to no options.
United's Glen Tilton and Continental's Jeffrey Simisek, the CEO's, have said the merger is structured to pass regulatory concerns.
But with Oberstar's "unflinching" determination to derail it, many analysts are hedging their bets. This merger will not be as easy as the Delta Airlines-Northwest in 2008.
Oberstar's aviation committee has scheduled a hearing for June 16.
Should the merger be approved?