S. HRG. 106–1015 UNITED AIRLINES-US AIRWAYS MERGER HEARING BEFORE THE SUBCOMMITTEE ON ANTITRUST, BUSINESS RIGHTS, AND COMPETITION OF THE COMMITTEE ON THE JUDICIARY UNITED STATES SENATE ONE HUNDRED SIXTH CONGRESS SECOND SESSION JUNE 26, 2000 PITTSBURGH, PA Serial No. J–106–92 Printed for the use of the Committee on the Judiciary ( U.S. GOVERNMENT PRINTING OFFICE 73–290 WASHINGTON : 2001 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 11-MAY-2000 03:13 Sep 20, 2001 Jkt 073290 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 E:\HR\OC\A290.XXX pfrm04 PsN: A290 COMMITTEE ON THE JUDICIARY ORRIN G. HATCH, Utah, Chairman STROM THURMOND, South Carolina PATRICK J. LEAHY, Vermont CHARLES E. GRASSLEY, Iowa EDWARD M. KENNEDY, Massachusetts ARLEN SPECTER, Pennsylvania JOSEPH R. BIDEN, JR., Delaware JON KYL, Arizona HERBERT KOHL, Wisconsin MIKE DEWINE, Ohio DIANNE FEINSTEIN, California JOHN ASHCROFT, Missouri RUSSELL D. FEINGOLD, Wisconsin SPENCER ABRAHAM, Michigan ROBERT G. TORRICELLI, New Jersey JEFF SESSIONS, Alabama CHARLES E. SCHUMER, New York BOB SMITH, New Hampshire MANUS COONEY, Chief Counsel and Staff Director BRUCE A. COHEN, Minority Chief Counsel SUBCOMMITTEE ON ANTITRUST, BUSINESS RIGHTS, AND COMPETITION MIKE DEWINE, Ohio, Chairman ORRIN G. HATCH, Utah HERBERT KOHL, Wisconsin ARLEN SPECTER, Pennsylvania ROBERT G. TORRICELLI, New Jersey STROM THURMOND, South Carolina PATRICK J. LEAHY, Vermont PETE LEVITAS, Chief Counsel and Staff Director JON LEIBOWITZ, Minority Chief Counsel and Staff Director (II) VerDate 11-MAY-2000 03:13 Sep 20, 2001 Jkt 073290 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 E:\HR\OC\A290.XXX pfrm04 PsN: A290 C O N T E N T S STATEMENT OF COMMITTEE MEMBER Page Specter, Hon. Arlen, a U.S. Senator from the State of Pennsylvania ................. 1 WITNESSES Canale, Randy, President and Directing General Chairman, Machinists Dis- trict 141 ................................................................................................................. 40 Delgadillo, Richard, President, Local 40, Association of Flight Attendants ....... 41 Fisher, Hon. Mike, Attorney General, Commonwealth of Pennsylvania ............ 2 Gillespie, Patrick, Business Manager, Philadelphia Building and Construction Trade Council ....................................................................................................... 35 Hudson, Paul, Executive Director, Aviation Consumer Action Project ............... 17 Isdell, Charles, Acting Director of Aviation, Philadelphia International Air- port ........................................................................................................................ 22 Longmuir, Shelley A., Senior Vice President, International Regulatory and Corporate Affairs, United Airlines ...................................................................... 11 Mahoney, Joseph W., Jr., Vice President, Greater Philadelphia Chamber of Commerce ............................................................................................................. 23 Maisano, Vincent J., International Vice President, District 13, Communica- tions Workers of America .................................................................................... 36 Mitchell, Kevin P., President, Business Travel Coalition .................................... 25 Nagin, Larry, Executive Vice President, Corporate Affairs and General Coun- sel, US Airways .................................................................................................... 12 SUBMISSION FOR THE RECORD Flight Attendants’ Statement on United Airlines’ Offer To Acquire US Air- ways, letter and attachments .............................................................................. 45 (III) VerDate 11-MAY-2000 03:13 Sep 20, 2001 Jkt 073290 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 E:\HR\OC\A290.XXX pfrm04 PsN: A290 VerDate 11-MAY-2000 03:13 Sep 20, 2001 Jkt 073290 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 E:\HR\OC\A290.XXX pfrm04 PsN: A290 UNITED AIRLINES-US AIRWAYS MERGER MONDAY, JUNE 26, 2000 U.S. SENATE, SUBCOMMITTEE ON ANTITRUST, BUSINESS RIGHTS, AND COMPETITION, COMMITTEE ON THE JUDICIARY, Philadelphia, PA. The subcommittee met, pursuant to notice, at 9 a.m., in the Cere- monial Courtroom, 1st floor, Federal Courthouse, 601 Market Square, Philadelphia, PA, Hon. Arlen Specter presiding. OPENING STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM THE STATE OF PENNSYLVANIA Senator SPECTER. Good morning. The hour of 9 o’clock having ar- rived, we shall proceed with this hearing of the Antitrust Sub- committee of the Judiciary Committee of the United States Senate. We have moved the time to 9 o’clock because after this hearing was scheduled, Senator Lott, the Majority Leader, called for floor action on the appropriations bill on the Labor, Health and Human Serv- ices, and Education Subcommittee which I chair so that it is nec- essary for me to be in Washington in the early afternoon, so we wanted to move the hearing up and conclude it a little before 11 o’clock since I had to catch the 11:11 a.m. Metroliner. Now, this is the first in a series of three statewide hearings on the proposed merger of United and US Airways. We will have a hearing in Pittsburgh on July 10 and a hearing in Lehigh Valley on July 24. There has already been one hearing of the Antitrust Subcommittee before, and we are going to focus on the broad array of issues involved in this proposed merger. Senator Biden, who used to be chairman of the full Judiciary Committee, will be joining us shortly. Senator Santorum had want- ed to be here but had other commitments. We are going to focus on the issue of competition which is the central national issue as to whether this merger would lessen com- petition. United is the biggest of the carriers. US Airways is num- ber six, and the essential purpose of the antitrust laws is to protect competition. We will also be taking a close look from a Pennsyl- vania perspective as to what the impact would be on our State since two major US Airways hubs are located here employing some 17,000 individuals. There is a major issue involving Pittsburgh on the maintenance center, which has been a prospective addition by United and by US Airways for some time, and we have yet to get a definitive answer on that subject. It implicates the United maintenance center in In- (1) VerDate 11-MAY-2000 03:13 Sep 20, 2001 Jkt 073290 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 E:\HR\OC\A290.XXX pfrm04 PsN: A290 2 dianapolis as to whether US Airways is going to proceed to con- struct the maintenance center in Pittsburgh. There have been major commitments made on the undertakings by both Pittsburgh airport and the Philadelphia airport in terms of capital improvements for the hub. Obviously if the merger is con- cluded, United will assume US Airways’ obligations, but there is more than just the contractual obligations. That is a presetting of the stage. I would like to call our first witness the distinguished Attorney General of Pennsylvania, Mike Fisher. The Honorable Michael Fisher comes to the Attorney General’s Office after an extraordinary career in public service in the State Senate, and prosecuting attorney in Pittsburgh, candidate for Lieu- tenant Governor, candidate for Governor, very deeply involved in the law and the public aspects of this proposed merger. Mr. Attorney General, we welcome you here and look forward to your testimony. STATEMENT OF HON. MIKE FISHER, ATTORNEY GENERAL, COMMONWEALTH OF PENNSYLVANIA Mr. FISHER. Thank you very much. It is a pleasure for me to be here, Senator. I first of all would like to commend you and Senator Biden and Senator Santorum for the interest that you have shown in this issue. I know that you participated in the hearings of the sub- committee in Washington week before last, and you have these hearings scheduled across Pennsylvania and I commend you for taking the extra effort to do that. We have submitted a written statement, but I would like to just summarize a couple of issues that I think are important for you. Senator SPECTER. Your full statement will be made a part of the record. We have set the time clocks at 5 minutes since we have so many witnesses. That will leave us some time for some dialog and Q&A. Mr. FISHER. Let me just start with a couple things which we mention in our statement. First of all, I think it is important for you and your colleagues to know that the State attorneys general, not only in this State but across the Nation, have a deep interest and concern in this pro- posed merger and that we have in 10 years been working together with the U.S. Department of Justice and Federal Trade Commis- sion and have firmly established our role in working with them as partners in review of these mergers, and this is no exception. We have already entered into an agreement with the parties in- volved here as well as with Justice as to how our review will pro- ceed together with Justice. I, together with Attorney General El- liott Spitzer—our offices will be heading the State review. I have with me today Jim Donohue who is the chief of my anti- trust section. Mr. Donohue together with his partner from New York will be the ones working with, at this point, 23 other State attorneys general in looking at the State perspective. There is no State in which this new merger will have a bigger impact than Pennsylvania. That is why we have taken the lead and that is why our participation is so important.