U.S. Approves Merger Of USAir and Piedmont
|
|
LEAD: The Transportation Department yesterday approved USAir Group Inc.’s acquisition of Piedmont Aviation Inc., rejecting the advice of an administrative law judge who had called the merger anticompetitive. The Transportation Department yesterday approved USAir Group Inc.’s acquisition of Piedmont Aviation Inc., rejecting the advice of an administrative law judge who had called the merger anticompetitive. The merger would create the nation’s seventh largest airline, which could dominate large parts of the Eastern United States. It would also give USAir, which has its main hub in Pittsburgh, a much stronger position at such major airports as La Guardia in New York and National Airport in Washington. Yesterday’s decision surprised some analysts and airline executives, who had expected the Transportation Department at least to impose conditions on the merger, such as making USAir give up some of its slots at La Guardia and National. The two large regional carriers had agreed to merge in March, after USAir bid $69 a share, or $1.59 billion, for Piedmont. But on Sept. 21, an administrative law judge, Ronnie A. Yoder, ruled that the proposed merger was anticompetitive and should be rejected by the Transportation Department. Judge Yoder emphasized that USAir would become a dominant carrier at La Guardia and National, where landing slots are difficult to get. As a result, he said, new carriers would find it almost impossible to come into these airports and compete. The rulings of judge, who works for the Transportation Department, are not binding. In this case, Mathew V. Scocozza, the assistant secretary for policy and international affairs for the Transportation Department, overruled him. Competitive Advantages ”Although some carriers may have advantages in the services and operations - barriers cited by Judge Yoder - those advantages do not prevent new carriers from entering the market,” the department said in a statement yesterday. The department said that the industry was still attracting new airlines. It also said that service from other airports, such as Dulles International, Baltimore-Washington International, Newark and John F. Kennedy, would provide competition. Piedmont has its main hub in Charlotte, N.C., and has built up major hubs at Dayton, Ohio, and Baltimore. Both airlines have many routes on which there is little or no competition from other large airlines. USAir and Piedmont, for example, operate out of 57 of the same airports and also offer service between 21 identical pairs of cities. The USAir-Piedmont merger was approved amid a growing concern that the consolidation of airline industry has led to higher fares. Moreover, the flurry of mergers has also brought some declines in service, as newly combined carriers tried to merge differing management styles and ways of operating. For example, Northwest’s takeover of Republic last year caused flight delays, lost baggage and other disruptions as the carrier. Continental had similar problems absorbing People Express |