Majority Statement

• Senator John D. (Jay) Rockefeller IV

  Chairman

  U.S. Senate Committee on Commerce, Science, and Transportation
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  Majority Statement

  Senator John D. (Jay) Rockefeller IV

  The last decade has seen the U.S. airline industry go through a dramatic restructuring.  Today, we examine the latest chapter in this story – the proposed merger of American Airlines and US Airways into the nation’s largest airline.  

  Consolidation was a necessary evil – no industry sector could sustain year after year of multi-billion dollar losses.  Although more carriers often meant more options for travelers, a weak and unstable industry was bad for our economy, our communities, passengers, and airline employees.  The question before us today is whether this latest, and perhaps final, round of consolidation will bring the long sought stability and the benefits that come with it – or whether instead it will bring fewer choices and higher fares for consumers.

  Having a healthy airline industry is critical if we are going to compete in a global economy.  I have worked for decades to make sure our aviation industry and U.S. airlines, in particular, are prepared to meet this challenge.  I am cautiously optimistic that we are on the verge of ending the industry’s historic volatility through boom and bust cycles.  

  The process to achieving a stable airline industry has been difficult.  So I want to be clear – restructuring in the case of the American-US Airways merger, and many others, is a euphemism for bankruptcy proceedings.  Restructuring using the bankruptcy process may allow these companies to survive but we cannot forget that this is a painful and difficult process with real costs to society. 

  No one knows this better than airline employees who have been battered by merger after merger. They have lost jobs, wages, benefits, and, in many cases, their pensions.  Customer service has suffered.  Routes have been cut to small and rural communities leaving them with fewer choices or worse - no service at all.  Had the Essential Air Service program not been in place to replace discontinued air service, many communities over the last several years would have lost air service all together.   

  We need to recognize that more than just the shareholders of the companies have paid the price for a healthy airline industry – we all have. But now everyone – not just shareholders – needs to benefit from today’s smaller, leaner, more efficient, and profitable industry.  And, right now, I am not sure that is the case.  

  The advantages of previous consolidations have not yet been passed on to consumers. They are facing higher fares, crowded and often smaller, less comfortable planes, and fees for every conceivable service.  The industry has become profitable and devised new revenue sources, yet it still ranks at the bottom of customer satisfaction services.  Passengers who pay the taxes to run the aviation system deserve far better service than they are currently receiving.   

  I also do not believe that, in particular, a healthier industry has improved small and rural air service.  Other airline CEOs have repeatedly promised that merging their airlines would lead to more choices for travelers in small and rural communities. I have found that not to be the case, at least in West Virginia, and I know many of my colleagues have shared the same experiences with rural service.

  All too often, small community air service is the hostage in aviation policy discussions – if the government fails to adopt or protect certain policies, small community air service will suffer. This is inexcusable.  West Virginia communities work hard every day to retain their air service.  For nearly 30 years on this Committee, I have fought tirelessly for air service to West Virginia. One thing I have learned is that small community air service is the first to go in tough times and almost never returns in good times.  A stable and profitable airline industry is necessary for small community airline service.  But, it does not guarantee it.  

  In the past, I have supported previous airline consolidation because I thought it was necessary for the health of the industry – an industry I still believe is critical to our future.  I am still waiting, though, to see the lasting benefits of previous mergers.  As we evaluate this proposed merger, we must make sure that the advantages of a strong aviation sector benefit more than just shareholders. They must benefit the passengers who deserve more choices and better service for the ticket prices they pay.

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Testimony

• Ms. Susan Kurland

  Assistant Secretary for Aviation and International Affairs

  U.S. Department of Transportation
  Download Testimony (27.92 KB)

• Dr. Gerald Dillingham

  Director of Civil Aviation Issues

  Government Accountability Office
  Download Testimony (1.80 MB)

• Mr. W. Douglas Parker

  Chairman and Chief Executive Officer

  US Airways Group
  Download Testimony (88.03 KB)

• Mr. Gary Kennedy

  Senior Vice President and General Counsel

  American Airlines
  Download Testimony (97.76 KB)

• Mr. Charlie Leocha

  Director

  Consumer Travel Alliance
  Download Testimony (1005.30 KB)