[Senate Hearing 113-826]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 113-826

                    THE AMERICAN AIRLINES/US AIRWAYS
                         MERGER: CONSOLIDATION,
                       COMPETITION, AND CONSUMERS

=======================================================================

                                HEARING

                               before the

                       SUBCOMMITTEE ON ANTITRUST,
                 COMPETITION POLICY AND CONSUMER RIGHTS

                                 of the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               ----------                              

                             MARCH 19, 2013

                               ----------                              

                           Serial No. J-113-9

                               ----------                              

         Printed for the use of the Committee on the Judiciary





[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




















                                                        S. Hrg. 113-826

                    THE AMERICAN AIRLINES/US AIRWAYS
                         MERGER: CONSOLIDATION,
                       COMPETITION, AND CONSUMERS

=======================================================================

                                HEARING

                               before the

                       SUBCOMMITTEE ON ANTITRUST,
                 COMPETITION POLICY AND CONSUMER RIGHTS

                                 of the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 19, 2013

                               __________

                           Serial No. J-113-9

                               __________

         Printed for the use of the Committee on the Judiciary





[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





                         U.S. GOVERNMENT PUBLISHING OFFICE 

98-440 PDF                     WASHINGTON : 2017 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001














                       COMMITTEE ON THE JUDICIARY

                  PATRICK J. LEAHY, Vermont, Chairman
DIANNE FEINSTEIN, California         CHUCK GRASSLEY, Iowa, Ranking 
CHUCK SCHUMER, New York                  Member
DICK DURBIN, Illinois                ORRIN G. HATCH, Utah
SHELDON WHITEHOUSE, Rhode Island     JEFF SESSIONS, Alabama
AMY KLOBUCHAR, Minnesota             LINDSEY GRAHAM, South Carolina
AL FRANKEN, Minnesota                JOHN CORNYN, Texas
CHRISTOPHER A. COONS, Delaware       MICHAEL S. LEE, Utah
RICHARD BLUMENTHAL, Connecticut      TED CRUZ, Texas
MAZIE HIRONO, Hawaii                 JEFF FLAKE, Arizona
            Bruce A. Cohen, Chief Counsel and Staff Director
        Kolan Davis, Republican Chief Counsel and Staff Director
                                 ------                                

   Subcommittee on Antitrust, Competition Policy and Consumer Rights

                   AMY KLOBUCHAR, Minnesota, Chairman
CHUCK SCHUMER, New York              MICHAEL S. LEE, Utah, Ranking 
AL FRANKEN, Minnesota                    Member
CHRISTOPHER A. COONS, Delaware       LINDSEY GRAHAM, South Carolina
RICHARD BLUMENTHAL, Connecticut      CHUCK GRASSLEY, Iowa
                                     JEFF FLAKE, Arizona
                 Craig Kalkut, Democratic Chief Counsel
                  Rob Porter, Republican Chief Counsel
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                            C O N T E N T S

                              ----------                              

                       MARCH 19, 2013, 10:03 A.M.

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Klobuchar, Hon. Amy, a U.S. Senator from the State of Minnesota..     1
Lee, Hon. Michael S., a U.S. Senator from the State of Utah......     3
    statement....................................................   191

                               WITNESSES

Witness List.....................................................    43
Horton, Thomas, Chairman, President, and Chief Executive Officer, 
  American Airlines and AMR Corporation, Fort Worth, Texas.......     6
    prepared statement...........................................    44
McGee, William J., Consultant, Consumers Union, New York, New 
  York...........................................................    11
    prepared statement...........................................    64
Moss, Diana L., Ph.D., Director and Vice President, American 
  Antitrust
  Institute (AAI), Washington, DC................................     9
    prepared statement...........................................    53
Parker, Douglas, Chairman and Chief Executive Officer, US Airways 
  Group, Tempe, Arizona..........................................     7
    prepared statement...........................................    44

                               QUESTIONS

Questions submitted to Thomas Horton by:
    Senator Blumenthal...........................................    90
    Senator Klobuchar............................................    80
    Senator Lee..................................................    85
Questions submitted to William J. McGee by:
    Senator Klobuchar............................................    82
    Senator Lee..................................................    88
Questions submitted to Diana L. Moss by:
    Senator Blumenthal...........................................    91
    Senator Klobuchar............................................    81
    Senator Lee..................................................    87
Questions submitted to Douglas Parker by:
    Senator Blumenthal...........................................    92
    Senator Klobuchar............................................    78
    Senator Lee..................................................    83

                                ANSWERS

Responses of Thomas Horton to questions submitted by Senators 
  Blumenthal, Klobuchar, and Lee.................................    93
Responses of William J. McGee to questions submitted by Senators 
  Klobuchar and Lee..............................................   102
Responses of Diana L. Moss to questions submitted by Senators 
  Blumenthal, Klobuchar, and Lee.................................   108
Responses of Douglas Parker to questions submitted by Senators 
  Blumenthal, Klobuchar, and Lee.................................   116

                MISCELLANEOUS SUBMISSIONS FOR THE RECORD

Alioto, Joseph M., Attorney, San Francisco, California, statement   133
Allied Pilots Association (APA) Government Affairs Committee, 
  Capt. Robert Coffman, Chairman, statement......................   135
American Federation of State, County and Municipal Employees 
  (AFSCME), Utah Local 1004, Patty Rich, Executive Director, 
  March 14, 2013, letter.........................................   316
Anoka County, Minnesota, Scott Schulte, County Commissioner, 
  March 14, 2013, letter.........................................   192
Association for a Better New York (ABNY), Jennifer Hensley, 
  Executive Director, March 8, 2013, letters.....................   200
Association of Flight Attendants (AFA), Veda Shook, International 
  President, statement...........................................   131
Association of Professional Flight Attendants (APFA), Laura R. 
  Glading, President, statement..................................   139
Association of Professional Flight Attendants (APFA) et al., 
  March 18, 2013, joint letter...................................   189
Austin-Bergstrom International Airport, Texas, Jim Smith, 
  Executive Director, March 18, 2013, letters....................   234
Bingman, Hon. Brian, President Pro-Tempore, Oklahoma State 
  Senate, March 8, 2013, letters.................................   209
Business Travel Coalition (BTC), letter to United States 
  Department of Justice and United States Department of 
  Transportation, March 19, 2013.................................   128
Cameron County, Texas, County Judge Carlos H. Cascos, CPA, March 
  18, 2013, letters..............................................   242
Central West Virginia Regional Airport Authority, R. Edison Hill, 
  Chairman, March 15, 2013, letter...............................   318
Charlotte, North Carolina, Hon. Anthony R. Foxx, Mayor, March 15, 
  2013, letter...................................................   195
Charlotte Chamber, Charlotte, North Carolina, Bob Morgan, 
  President and Chief Executive Officer, March 13, 2013, letter..   194
Charlotte Regional Partnership, Ronnie Bryant, C.Ec.D., F.M., 
  H.L.M., President and Chief Executive Officer, March 14, 2013, 
  letter.........................................................   196
Chicagoland Chamber of Commerce, Gerald J. Roper, President and 
  Chief Executive Officer, March 15, 2013, letter, statement.....   178
City of Abilene, Texas, Hon. Norm Archibald, Mayor, March 11, 
  2013, letters..................................................   231
City of Austin, Texas, Hon. Lee Leffingwell, Mayor, March 15, 
  2013, letters..................................................   236
City of Brownsville, Texas, Hon. Tony Martinez, Mayor, March 13, 
  2013, letters..................................................   240
City of Cedar Rapids, Iowa, Hon. Ron J. Corbett, Mayor, March 8, 
  2013, letters..................................................   164
City of College Station, Texas, Hon. Nancy F. Berry, Mayor, March 
  12, 2013, letters..............................................   285
City of Corpus Christi, Texas, Hon. Nelda Martinez, Mayor, March 
  11, 2013, letters..............................................   244
City of Dallas, Texas, Hon. Michael S. Rawlings, Mayor, March 18, 
  2013, letter...................................................   252
City of Dubuque, Iowa, Hon. Roy D. Buol, Mayor, March 4, 2013, 
  letter.........................................................   168
City of Fort Worth, Texas, Hon. Betsy Price, Mayor, March 14, 
  2013, letter...................................................   256
City of Killeen, Texas, Hon. Daniel A. Corbin, Mayor, March 8, 
  2013, letters..................................................   264
City of Laguna Vista, Texas, Hon. Susie Houston, Mayor, March 15, 
  2013, letters..................................................   266
City of Laredo, Texas, Hon. Raul G. Salinas, Mayor, March 13, 
  2013, letters..................................................   270
City of Los Angeles, California, Hon. Antonio R. Villaraigosa, 
  Mayor, March 18, 2013, letter..................................   145
City of McAllen, Texas, Hon. Richard F. Cortez, Mayor, March 18, 
  2013, letters..................................................   279
City of Midland, Texas, Hon. W. Wesley Perry, Mayor, letters.....   283
City of Philadelphia, Pennsylvania, Hon. Michael A. Nutter, 
  Mayor, March 18, 2013, letter..................................   219
City of Philadelphia City Council, Pennsylvania, Darrell L. 
  Clarke, President, March 15, 2013, letter......................   216
City of Phoenix, Arizona, Hon. Greg Stanton, Mayor, and City of 
  Tempe, Arizona, Hon. Mark W. Mitchell, Mayor, March 15, 2013, 
  letter.........................................................   144
City of Port Isabel, Texas, Hon. Joe E. Vega, Mayor, March 15, 
  2013, letters..................................................   291
City of San Antonio, Texas, Hon. Julian Castro, Mayor, March 18, 
  2013, letters..................................................   299
City of Sioux City, Iowa, Hon. Robert E. Scott, Mayor, March 11, 
  2013, letters..................................................   174
City of South Padre Island, Texas, Hon. Robert N. Pinkerton, Jr., 
  Mayor, March 13, 2013, letters.................................   275
City of Texarkana, Texas, Hon. Bob Bruggeman, Mayor; City of 
  Texarkana, Arkansas, Hon. N. Wayne Smith, Mayor; Texarkana 
  Airport Authority, John Jarvis, Chairman; March 19, 2013, 
  letter.........................................................   233
City of Tulsa, Oklahoma, Hon. Dewey F. Bartlett, Jr., Mayor, 
  March 11, 2013, letters........................................   213
City of Tyler, Texas, Hon. Barbara R. Bass, Mayor, March 8, 2013, 
  letters........................................................   307
City of Waco, Texas, Hon. Malcolm Duncan, Jr., Mayor, March 8, 
  2013, letters..................................................   309
City of Waterloo, Iowa, Hon. Buck Clark, Mayor, March 7, 2013, 
  letter.........................................................   176
City of Wichita Falls, Texas, Hon. Glenn Barham, Mayor, March 12, 
  2013, letters..................................................   311
Coffman, Capt. Robert, Chairman, Allied Pilots Association (APA) 
  Government Affairs Committee, statement draft..................   228
Corpus Christi International Airport (CCIA), Fernando (Fred) 
  Segundo, A.A.E., Director, Department of Aviation, March 12, 
  2013, letters..................................................   246
Crown, Lester, Chair, Transportation Committee, Civic Committee, 
  Commercial Club of Chicago, and Henry Crown and Company, March 
  15, 2013, letter...............................................   180
Dakota County Regional Chamber of Commerce, Minnesota, Ruthe 
  Batulis, President, March 13, 2013, letter.....................   193
Dallas Regional Chamber, Texas, Ambassador James C. Oberwetter, 
  Retired, President and Chief Executive Officer, March 13, 2013, 
  letters........................................................   248
Des Moines Airport Authority, Iowa, Donald L. Smithey, Executive 
  Director, March 7, 2013, letter................................   167
Dubuque Regional Airport, Robert A. Grierson, A.A.E., Manager, 
  March 6, 2013, letter..........................................   166
East Texas Regional Airport, Roy H. Miller, Jr., A.A.E., Airport 
  Director, March 7, 2013, letter................................   253
Eastern Iowa Airport, The, Tim Bradshaw, A.A.E., Airport 
  Director, March 12, 2013, letters..............................   169
Ferriss, Bruce, and Barbara Ferriss, Spokespersons, Association 
  of Professional Flight Attendants (APFA), and Former TWA Flight 
  Attendants, statement..........................................   150
Florida Chamber of Commerce, David Hart, Executive Vice 
  President, March 18, 2013, letter..............................   159
Fort Worth Chamber of Commerce, Texas, Bill Thornton, President 
  and Chief Executive Officer, letters...........................   254
Greater Miami Convention and Visitors Bureau (GMCVB), William D. 
  Talbert III, President and Chief Executive Officer, March 15, 
  2013, letter...................................................   161
Greater Philadelphia Chamber of Commerce, Pennsylvania, Robert C. 
  Wonderling, President and Chief Executive Officer, March 15, 
  2013, letter...................................................   218
Greater Phoenix Chamber of Commerce, Arizona, Todd Sanders, 
  President and Chief Executive Officer, March 13, 2013, letter..   142
Greater Phoenix Economic Council, Arizona, Barry Broome, 
  President and Chief Executive Officer, March 13, 2013, letter..   143
Gregg County, Texas, County Judge Bill Stoudt, March 7, 2013, 
  letters........................................................   260
Houston Executive Airport, Andrew D. Perry, A.A.E., Executive 
  Director, letter to Hon. Amy Klobuchar, a U.S. Senator from the 
  State of Minnesota, March 13, 2013.............................   258
Houston Executive Airport, Andrew D. Perry, A.A.E., Executive 
  Director, letter to Hon. Michael S. Lee, a U.S. Senator from 
  the State of Utah, March 18, 2013..............................   259
Illinois Manufacturers' Association (IMA), Gregory W. Baise, 
  President, letter..............................................   179
Jack Brooks Regional Airport, Beaumont, Texas, Alex Rupp, Airport 
  Director, March 19, 2013, letters..............................   238
JetBlue Airways Corporation, Robert C. Land, Senior Vice 
  President Government Affairs and Associate General Counsel, 
  March 18, 2013, letter.........................................   182
Kanawha County, West Virginia, W. Kent Carper, Commissioner, 
  March 15, 2013, letter.........................................   322
Land, Robert C., Senior Vice President Government Affairs and 
  Associate General Counsel, JetBlue Airways, March 18, 2013, 
  letter.........................................................   221
Laredo International Airport, Texas, Jose Luis Flores, Airport 
  Manager, March 13, 2013, letters...............................   268
Los Angeles Area Chamber of Commerce, California, Gary Toebben, 
  March 18, 2013, letter.........................................   147
Los Angeles County Economic Development Corporation (LAEDC), 
  David Flaks, Chief Operating Officer, March 13, 2013, letter...   148
Lubbock Preston Smith International Airport, James W. Loomis, 
  A.A.E., Executive Director, March 15, 2013, letters............   273
McAllen International Airport, Texas, Philip K. Brown, Director 
  of Aviation, March 18, 2013, letters...........................   277
Midland International Airport, Texas, Marv Esterly, Director of 
  Airports, March 18, 2013, letters..............................   281
Miami-Dade County, Florida, Hon. Carlos A. Gimenez, Mayor, March 
  18, 2013, letter...............................................   163
New York Building Congress (NYBC), Richard T. Anderson, 
  President, March 18, 2013, letter..............................   202
North Texas Commission, Mabrie Jackson, President and Chief 
  Executive Officer, March 6, 2013, letters......................   289
Partnership for New York City, Kathryn S. Wylde, President and 
  Chief Executive Officer, March 15, 2013, letter................   203
Pennsylvania Chamber, Gene Bar, President and Chief Executive 
  Officer, March 15, 2013, letter................................   215
Rio Grande Valley Partnership, Texas, Julian Alvarez, President 
  and Chief Executive Officer, March 15, 2013, letters...........   293
Salt Lake Airport Authority Board, Utah, Mike Zuhl, Member, 
  letter.........................................................   317
San Angelo Regional Airport, Texas, Luis E. Elguezabal, A.A.E., 
  Airport Director, March 18, 2013, letters......................   295
Shannon, Hon. T.W., Speaker, Oklahoma State House of 
  Representatives, March 14, 2013, letter........................   208
Sioux Gateway Airport, Iowa, David Bernstein, Board President, 
  March 11, 2013, letters........................................   172
South Padre Island Chamber of Commerce, Texas, Roxanne Guenzel, 
  President and Chief Executive Officer, March 18, 2013, letters.   303
State Chamber of Oklahoma, Fred S. Morgan, President and Chief 
  Executive Officer, March 11, 2013, letters.....................   206
State of Arizona, Hon. Janice K. Brewer, Governor, March 15, 
  2013, letter...................................................   141
State of North Carolina, Hon. Pat McCrory, Governor, March 13, 
  2013, letter...................................................   197
State of North Carolina, Sharon Decker, Secretary, Department of 
  Commerce, letter...............................................   198
State of Oklahoma, Hon. Mary Fallin, Governor, March 6, 2013, 
  letter.........................................................   205
State of Texas, Hon. David Dewhurst, Lieutenant Governor, March 
  18, 2013, letter...............................................   272
State of Texas, Hon. Rick Perry, Governor, March 19, 2013, letter   257
State of West Virginia, Hon. Earl Ray Tomblin, Governor, March 
  22, 2013, letter...............................................   320
Straus, Hon. Joe, Speaker, Texas State House of Representatives, 
  March 13, 2013, letters........................................   305
Tulsa Regional Chamber, Michael S. Neal, C.C.E., C.C.D., 
  President and Chief Executive Officer, March 14, 2013, letters.   211
U.S. Airline Pilots Association (USAPA), Gary Hummel, President, 
  March 18, 2013, letter.........................................   199
U.S. Airline Pilots Association (USAPA), Capt. Gary Hummel, 
  President, statement...........................................   313
Village of Rosemont, Illinois, Hon. Brad Stephens, Mayor, letter.   181
Waterloo Regional Airport, Iowa, Bradley Hagen, Airport Director, 
  March 7, 2013, letter..........................................   177
Wonderling, Robert C., President and Chief Executive Officer, 
  Greater Philadelphia Chamber of Commerce, Pennsylvania, March 
  15, 2013, letter...............................................   138

                 ADDITIONAL SUBMISSIONS FOR THE RECORD

Submissions for the record not printed due to voluminous nature, 
  previously printed by an agency of the Federal Government, or 
  other criteria
  determined by the Committee, list..............................   324

Ferriss, Bruce, and Barbara Ferriss, Spokespersons, Association 
  of Professional
  Flight Attendants (APFA), and Former TWA Flight Attendants, 
  additional
  submission:
    http://twajustice.com/senate_exhibits.html...................   324

Mitchell, Kevin, Chairman, Business Travel Coalition, statement:
    http://judiciary.house.gov/hearings/113th/02262013_2/
      Mitchell%2002262013.pdf....................................   324

Moss, Diana L., Ph.D., Director and Vice President, American 
  Antitrust
  Institute (AAI), additional submission:
    http://www.antitrustinstitute.org/antitrust/sites/default/
      files/ AAI_BTC_USAir-AA_White%20Paper_8-7.pdf..............   324

 
                    THE AMERICAN AIRLINES/US AIRWAYS
                         MERGER: CONSOLIDATION,
                       COMPETITION, AND CONSUMERS

                              ----------                              


                        TUESDAY, MARCH 19, 2013

                      United States Senate,
      Subcommittee on Antitrust, Competition Policy
                               and Consumer Rights,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:03 a.m., in 
Room SD-226, Dirksen Senate Office Building, Hon. Amy 
Klobuchar, Chairman of the Subcommittee, presiding.
    Present: Senators Klobuchar, Schumer, Blumenthal, Lee, 
Graham, and Flake.
    Also present: Senator Cruz.

            OPENING STATEMENT OF HON. AMY KLOBUCHAR,
           A U.S. SENATOR FROM THE STATE OF MINNESOTA

    Chairman Klobuchar. Okay. We will call the hearing to order 
today for the Antitrust Subcommittee. I want to thank everyone 
for being here today for my first Subcommittee hearing as the 
Chairman of this Subcommittee, and Senator Lee, who is the 
Ranking Member, is an old hand at this, but we thank all of you 
for coming today.
    I have long been concerned about the consolidation in the 
airline industry. For me it was highlighted in 2008 when my 
hometown airline, Northwest Airlines, merged with Delta. At 
that time, it was widely predicted that that merger would usher 
in a wave of consolidation, and several mergers later, here we 
are with a large deal that would combine two of the Nation's 
largest network carriers. Five years ago, we had six major 
carriers, and should this merger be approved, we will be down 
to three.
    On February 14th, Valentine's Day, American Airlines and US 
Airways announced their proposal to merge. If the merger goes 
through, the new American Airlines would be the Nation's 
largest carrier and result in the four top airlines controlling 
approximately 80 percent of the domestic airline market, and 
that includes Southwest.
    I approach this hearing with an understanding of the 
enormous challenges that the airlines industry has faced over 
the years. The attacks on September 11th, ever-increasing fuel 
costs in a volatile market, and the economic downturn have all 
put airlines to the test. There is also significant global 
competition which creates incentives to merge. I get that. But 
I also know that a strong and vibrant airline industry is 
critical to our country. Safe, reliable, and affordable air 
travel is essential to communities large and small. Strong air 
service attracts businesses and tourists, and that results in 
economic growth and jobs.
    But given how critical the airline industry is to the U.S. 
commerce and to public safety, we need to be vigilant in 
examining any potential challenges this merger might create, 
particularly in the context of affordability and accessibility 
of air service.
    With this merger coming on the heels of major airline 
consolidation--that would be Delta/Northwest, United/
Continental, Frontier/Republic, and Southwest/AirTran--this 
Subcommittee and the Justice Department must review the 
concentration in the industry and what that means for services 
and prices, as well as airport accessibility in less popular 
but just as important destinations, particularly in rural 
areas.
    Baggage fees, change fees, and seating fees are pervasive 
and increasing in the industry. Last year, legacy carriers took 
in more than $10 billion in fees. With fewer competing 
airlines, can we expect even more of these extra charges? Are 
the few low-cost carriers that remain enough to keep what would 
be the three legacy carriers in Southwest in check? And we need 
to know that fewer airlines will not mean fewer flights and 
diminished services for the airports that are not the major 
hubs.
    There will always be ample competition between major cities 
like New York, Chicago, and Los Angeles. We all know that. But 
what about cities like Minneapolis or cities like Cincinnati, 
Memphis, Milwaukee, and Pittsburgh? What about a city like 
Rochester, Minnesota, home of the Mayo Clinic, that is 
currently served by American Airlines? Service to all 
metropolitan areas and mid-size and small cities is more 
important than ever. Yet we have seen reduced service to 
certain mid-sized cities.
    We appreciate the goals here, the stated promise of 
complementary flight networks, increased efficiency, and 
offering more options for customers. But consumers have a right 
to be skeptical. When we have one fewer choice on that matrix 
of flight options while searching for fares on the Internet, 
consumers cannot help but wonder: Would an added competitor be 
fighting a little harder to get my business at a lower price? 
Or would an added competitor be able to offer me more 
convenient flight times connecting through a different hub?
    More important than the convenience issues is the potential 
impact on jobs. It is no small feat that the major unions here 
have supported the merger. Still, what we have seen with past 
airline mergers gives us reason for caution. I will say my home 
State of Minnesota was fortunate in that we retained most, but 
not all, of the jobs in Minnesota following the Delta/Northwest 
merger. Delta is a major employer in our State, and we are 
proud of that. But in the wake of similar mergers, not every 
State has been so lucky.
    Mr. Parker and Mr. Horton, we understand and appreciate 
your reasons for advancing this merger. It is good for your 
bottom lines, and at the end of the day, you have to answer to 
your shareholders, and you are competing in a global 
marketplace. But on this Subcommittee, we have to get answers 
for the people of this country. Whether it is the American 
family looking for an affordable trip to Disneyland or looking 
to visit their grandma in Pittsburgh, or whether it is a small 
business owner looking for the best frequent flyer program, 
they want as many possible choices, and they want choices at 
affordable prices. And they want to know that no airline or no 
small group of airlines gains a stranglehold on the market. 
That is the reason we are here today, and I look forward to 
hearing your thoughts and the thoughts of our other two 
witnesses, and we thank you for being here.
    I now turn it over to the Ranking Member, Senator Lee.

           OPENING STATEMENT OF HON. MICHAEL S. LEE,
             A U.S. SENATOR FROM THE STATE OF UTAH

    Senator Lee. Thank you, Madam Chair. Thanks to all of you 
for joining us today.
    The U.S. airline industry touches the lives of almost every 
American in some way or another. These airlines allow us to 
travel for business and for leisure, to meet new people and to 
reunite with loved ones.
    Air travel is also an important element of our national 
infrastructure, and it is critical to our economy. One in eight 
American jobs depends in one way or another on travel and 
tourism, and analysts estimate that U.S. travel expenditures 
will total more than $850 billion in 2013.
    For all these reasons, Congress must take seriously any 
activity that will seriously and materially affect the airline 
industry.
    Our country has benefited greatly from airline deregulation 
ever since that began in 1978. Government control of this 
industry, like Government management of any private enterprise, 
had unfortunate results. In the years since deregulation, 
airfares have dropped substantially, and options for travelers 
have simultaneously expanded. These benefits are the result of 
free market competition and will continue as long as the 
industry remains robustly competitive.
    Despite the positive benefits of deregulation, the story of 
our Nation's airlines in recent decades is not one of unbroken, 
unmitigated success. Uneven earnings, volatile fuel costs, and 
structural changes have led to a long succession of airline 
bankruptcies. As Federal agencies have provided assistance and 
assumed responsibility for many pension plans, as a result of 
those airline bankruptcies, the financial stability of the 
airline industry is one of special concern.
    To help cope with changing circumstances, airlines have 
turned to consolidation. In the last decade alone, we have seen 
no fewer than six significant airline mergers in this country, 
and today we consider the seventh major merger, which would be 
an $11 billion transaction.
    The combined American and US Airways would employ nearly 
120,000 people, would have 2012 revenues of almost $40 billion, 
and fly 950 jets to approximately 900 locations. The merger 
would leave only four airlines with significant national 
networks, and those carriers would control over 80 percent of 
the domestic market.
    As a result, our Subcommittee, which is tasked with 
oversight in competition policy and consumers rights, must 
conduct a thorough examination of this transaction.
    The Department of Justice will, of course, review the 
proposed merger under the Hart-Scott-Rodino Act, applying an 
analytical framework set forth in the horizontal merger 
guidelines to assess the anticompetitive effects of reduced 
competition in relevant markets, identify any increased 
barriers for entry on future competitors, and consider 
efficiencies and benefits that may flow from this 
consolidation.
    As I have noted in previous hearings on this Subcommittee, 
several principles guide my approach to antitrust law. Most 
importantly, we must remember the late Robert Bork's insight 
that the purpose of our antitrust laws is to maximize consumer 
welfare. We seek, therefore, to protect competition rather than 
to protect competitors.
    Government may sometimes have a proper role in ensuring 
that a company does not obtain undue market power, but it is 
important for Federal agencies to--it is improper, rather, for 
Federal agencies to pick winners and losers in the marketplace, 
and absent evidence that a transaction will substantially 
reduce competition and thereby harm consumers, I believe 
Government intervention is usually unwarranted.
    Mergers are an essential element of our rapidly changing 
economy, often creating significant efficiencies and helping to 
ensure that resources are put to their most productive possible 
use. I believe this merger holds the promise of cost savings 
through combining complementary assets, reducing duplicative 
operating expenses, and integrating computer systems as well as 
airline fleets. In a competitive market, consumers benefit from 
such efficiencies in the form of higher-quality services, like 
an expanded route network at lower prices.
    Likewise, some industry experts suggest that the domestic 
market will benefit if comprised of a few large but 
economically stable and competitive airlines.
    Others, however, have expressed concern that a post-merger 
American, the largest domestic carrier, could exercise undue 
market power, leading to higher prices and even reduced 
services to certain communities in America. They argue that 
past airline mergers have created capacity reductions and price 
increases on some routes from the combined airlines' hubs.
    Many of my constituents in Utah complain about high fares 
flying into and out of Salt Lake City. Critics fear that this 
merger will likewise allow American to raise prices on certain 
of its routes and that, despite barriers to entry, will provide 
other--and that increased barriers on entry will prevent other 
carriers from providing competitive discipline.
    As one example, they note that just a few miles down the 
road from here at Reagan National Airport, a combined American 
and US Airways would control nearly 70 percent of all passenger 
gate slots, making effective competition from rivals very 
difficult to achieve.
    These are important issues, and I thank Senator Klobuchar, 
the Chair of this Subcommittee, for holding this hearing. By 
carefully weighing the evidence and engaging in rigorous 
analysis, we help ensure a competitive marketplace that 
maximizes consumer welfare and in the end allows our economy to 
thrive. I look forward to hearing the testimony from each of 
you today, and I thank you for being here.
    Chairman Klobuchar. Well, thank you very much, Senator Lee.
    I first want to note that we have received written 
testimony as well as numerous submissions for the record, 
including letters from local communities, a joint letter from 
several labor unions involved in the merger that support it--
that is, the Association of Professional Flight Attendants, the 
Transport Workers Union, the Allied Pilots Association, US 
Airlines Pilots Association, and Association of Flight 
Attendants.
    We also have testimony from the Business Travel Coalition, 
and we also have testimony from the TWA flight attendants who 
have some concerns, and many other submissions. All materials 
will be included in the record, and the record will remain open 
for 1 week following the hearing for any additional 
submissions.
    [The information referred to appears as submissions for the 
record.]
    Chairman Klobuchar. Now I would like to introduce our panel 
of witnesses.
    Our first witness to testify will be Mr. Douglas Parker. 
Mr. Parker has been chairman and chief executive officer of US 
Airways since 2005. Before joining US Airways, Mr. Parker 
served as president and CEO of American West Airlines. 
Actually, he will be the second witness to testify even though 
he is first in the line.
    Our first witness to testify will be Mr. Thomas Horton, who 
is the chairman and chief executive officer of AMR Corporation 
and American Airlines. He is also the current chairman of the 
oneworld Global Airline Alliance. Prior to becoming CEO in 
2011, Mr. Horton served as president of AMR and American and 
also held a number of positions with the airline. Before that, 
he served as chief financial officer and vice chairman of AT&T.
    Our third witness testifying today is Dr. Diana Moss, the 
director and vice president of the American Antitrust 
Institute, as well as adjunct faculty in the Department of 
Economics and Interdisciplinary Telecommunications Program at 
the University of Colorado at Boulder. Prior to joining AAI in 
2001, Dr. Moss was a senior staff economist at the Federal 
Energy Regulatory Commission.
    Finally, we have with us Mr. William McGee. Mr. McGee is a 
journalist, writer, and consumer advocate who serves as a 
consultant on aviation and travel issues for Consumers Union. 
He is a former editor-in-chief of Consumer Reports' travel 
letter. He is also a member of the Department of Transportation 
Future of Aviation Advisory Committee.
    Thank you for appearing before our Subcommittee today. I 
now ask all of our witnesses to rise and raise their right hand 
as I administer the oath.
    Do you affirm that the testimony you are about to give 
before the Committee will be the whole truth, the truth, and 
nothing but the truth, so help you God?
    Mr. Horton. I do.
    Mr. Parker. I do.
    Ms. Moss. I do.
    Mr. McGee. I do.
    Chairman Klobuchar. Thank you.
    Now we will begin our testimony with Mr. Thomas Horton.

  STATEMENT OF THOMAS HORTON, CHAIRMAN, PRESIDENT, AND CHIEF 
EXECUTIVE OFFICER, AMERICAN AIRLINES AND AMR CORPORATION, FORT 
                          WORTH, TEXAS

    Mr. Horton. Good morning, Chairman Klobuchar, Senator Lee, 
and Members of the Subcommittee. I appreciate the invitation to 
testify and would like to explain why this merger will have 
such a positive outcome for our customers, our people, and our 
financial stakeholders.
    Thanks to the extraordinary efforts of our people, many of 
whom are with us here today, American is on the verge of 
completing one of the most successful corporate restructurings 
ever. We have renegotiated debt and leases, optimized our fleet 
and facilities, and have achieved certainty and stability with 
labor contracts in place with each of our labor unions. We have 
also strengthened our network and our oneworld Alliance 
partnerships and invested in leading products and services and 
a new and modern fleet to better deliver for our customers.
    We expect our bond holders to receive a full recovery and 
the former AMR shareholders to own a share in the combined 
company, with additional upside if the stock appreciates in 
value.
    This is quite an unusual outcome. We are proud of this 
result, and now that we have put our own house in order, our 
merger with US Airways will create a new American Airlines, a 
global competitor worthy of our name as America's flag carrier. 
Flying under the iconic American Airlines brand, it will be 
positioned to compete not just against other domestic carriers 
but against the best the world has to offer.
    Our journey to this day has been challenging, to say the 
least. Over the past decade, our industry has experienced 
extraordinary economic headwinds. While almost every other 
legacy carrier used the bankruptcy process early on to lower 
their costs, American fought valiantly to avoid doing so.
    In 2003, American and our unions reached consensual 
agreements to reduce costs without having to file for 
restructuring. However, our major competitors subsequently went 
down the restructuring path, surpassing the savings we 
achieved, which gave them a singular--a significant advantage.
    We also experienced a new wave of powerful competition from 
the growth of low-cost carriers, and importantly, Delta, 
Northwest, United, Continental, Southwest, and AirTran further 
strengthened their positions through mergers.
    In the face of this competitive challenge, we made great 
progress in expanding our international alliances, finally 
securing antitrust immunity for our own joint ventures with 
oneworld Partners, British Airways, Iberia, Japan Airlines, and 
LAN Airlines. We signed the largest ever aircraft order, and we 
now have 500 new aircraft on order and options for 500 more, 
which will dramatically improve fuel efficiency, reduce 
emissions, and offer state-of-the-art comfort for our 
customers.
    Despite these efforts, however, our costs remained 
uncompetitive, and after a decade of losses that reached $12 
billion, in November 2011 our board concluded that the way 
forward was to restructure as most of our competitors had done.
    As difficult as restructuring has been, it was the right 
decision. We began with the explicit philosophy that the 
restructuring would be fair and equitable within the company. 
We started by shrinking senior management by a third. While we 
achieved substantial cost savings through long-term agreements 
with our labor unions, we were still able to grant pay 
increases and provide retirement incentives to reduce the 
involuntary job losses.
    We also worked with our Creditors' Committee, including the 
PBGC, to assure that the accrued pension benefits to our people 
will be paid rather than handed over to the PBGC, as others 
have done.
    The hard work developing our network, our products, and our 
customer experience helped us achieve record revenue, topping 
our U.S. peers in year-over-year revenue growth for 6 straight 
months is 2012.
    Once we had a line of sight on how strong the restructured 
American could be, we concluded it was the right time to 
consider a merger. Hence, last summer, in collaboration with 
our board and our Creditors' Committee, American began to look 
at merger alternatives using a fact-based, disciplined process. 
Everyone involved, including labor unions at both companies, 
and our Ad Hoc Committee of bond holders agreed that a merged 
American and US Airways would deliver a range of benefits and 
improve stability in our industry that greatly needs it.
    Last month, we announced a deal that would give American's 
financial stakeholders 72 percent and US Airways' shareholders 
28 percent of the combined company. The new American will take 
flight in what continues to be one of the most intensive--
intensely competitive industries in the world, and there is 
nothing the people of American want more than to put American 
back on top as a fierce competitor and set a new standard of 
excellence, and that is exactly what this merger will do.
    I am optimistic about our future and pleased to partner 
with my long-time friend Doug Parker to make that vision a 
reality.
    Thank you again for this opportunity to address the 
Subcommittee, and I stand ready to answer your questions.
    [The prepared statement of Thomas Horton appears as a 
submission for the record.]
    Chairman Klobuchar. Thank you, Mr. Horton.
    Mr. Parker.

   STATEMENT OF DOUGLAS PARKER, CHAIRMAN AND CHIEF EXECUTIVE 
           OFFICER, US AIRWAYS GROUP, TEMPE, ARIZONA

    Mr. Parker. Good morning, Chairman Klobuchar, Ranking 
Member Lee, Members of the Subcommittee. Thank you for the 
opportunity to testify today about the merger of US Airways and 
American Airlines, creating the world's best airline through a 
combination that will be good for competition, consumers, and 
choice.
    My name is Doug Parker. I am chairman and chief executive 
officer of US Airways. Our team operates over 3,000 flights per 
day, connecting some 80 million passengers per year to more 
than 200 communities large and small, primarily through our 
hubs in Charlotte, Philadelphia, Phoenix, and here in 
Washington, DC. I want to begin by thanking all of our 
employees who are here today to support this merger, including 
pilots and flight attendants in uniform from American and US 
Airways, who know that this transaction represents a brighter 
future for our 100,000 employees. I am proud to be here 
representing them and extremely grateful for their support, so 
thank you all very much.
    This merger will benefit our customers, our employees, our 
shareholders, and the communities we serve by integrating the 
complementary networks of American Airlines and US Airways into 
something better than either airline can offer on its own. It 
will enhance competition in what is already a vigorously 
competitive marketplace. Passengers and communities will 
benefit from more and better service. Employees will receive 
improved pay, benefits, and job security. And our shareholders 
will benefit from the improved financial stability of the 
combined company. Because of these benefits, the combination 
has attracted unprecedented support from the employees and 
labor unions of both companies, the financial markets, and the 
communities we serve.
    Consumer demand is the driver for this combination, airline 
passengers want broader networks capable of getting them to 
more places more efficiently. In response to that demand, Delta 
merged with Northwest and United merged with Continental. 
Southwest responded to the same consumer demand when it 
acquired AirTran. All three transactions were cleared by the 
Justice Department because those combinations created 
substantial passenger benefits with minimal competitive 
overlap. By combining American and US Airways, the new American 
Airlines will build the network that passengers have told us 
they want, one that will compete more effectively with the 
other networked airlines as well as low-cost carriers.
    The benefits of the new American Airlines stem from the 
complementary nature of our operations. Out of over 900 
domestic nonstop routes, American Airlines and US Airways have 
only 12 nonstop overlaps. By combining these networks, we will 
provide thousands of passengers better alternatives by creating 
over 1,300 new connecting opportunities and the potential to 
access numerous cities worldwide served by one carrier but not 
the other.
    Domestic airline markets will become even more competitive. 
Although it will be the largest airline in the United States, 
the new American Airlines will have less than 25 percent of 
domestic available seat miles and will compete against the 
nationwide networks of Delta, with 21 percent share; United, 
with 19 percent; and Southwest, with 19 percent. The new 
American Airlines will also compete against Southwest's 
significant lower cost structure and a host of actual smaller 
but fast-growing, lower-cost airlines, including Jet Blue, 
Spirit, Allegiant, and Virgin America.
    US Airways has historically provided extensive air service 
to small and medium-sized communities, and the new American 
Airlines will continue that commitment as service for smaller 
communities that was not economical becomes possible thanks to 
the traffic flows across the broader network.
    The best example of our commitment to smaller communities 
is the hub we have built here at Reagan National Airport where 
we use a large majority of our slots to serve small and medium-
sized communities to ensure the benefits of our network extend 
beyond connecting large cities to the Nation's capital.
    The new American Airlines will also be a stronger financial 
company. We expect to generate over $1 billion in net 
synergies, primarily due to increased revenues from new 
passengers, taking advantage of the broader network and the 
improved service. That improved financial performance will 
provide American's bankruptcy creditors an enhanced opportunity 
for full recovery. That financial stability will also provide 
very significant benefits to our employees, including better 
pay and benefits, more jobs, and greatly improved job security, 
and better opportunities for advancement.
    Antitrust review of these issues is important, and we have 
been and will continue to work with the Justice Department to 
demonstrate the competitive benefits of this proposed merger. 
We appreciate the opportunity to address these issues with the 
Subcommittee today and commit to working with you in your 
oversight capacity.
    I will be happy to answer any questions at the right time. 
Thank you very much.
    [The prepared statement of Douglas Parker appears as a 
submission for the record.]
    Chairman Klobuchar. Thank you very much.
    Dr. Moss.

        STATEMENT OF DIANA L. MOSS, PH.D., DIRECTOR AND
         VICE PRESIDENT, AMERICAN ANTITRUST INSTITUTE,
                         WASHINGTON, DC

    Ms. Moss. Thank you. I would like to thank Madam 
Chairwoman, Senator Klobuchar, Ranking Member Senator Lee, and 
the Members of the Subcommittee for holding this hearing on the 
proposed merger of US Airways and American.
    Chairman Klobuchar. Is your mic on?
    Ms. Moss. My mic is on now. I apologize.
    Chairman Klobuchar. Excellent. Thank you. You do not have 
to address us again.
    Ms. Moss. It is an honor to appear here today. My testimony 
is based on a white paper that was jointly produced by the 
American Antitrust Institute and the Business Travel Coalition. 
We conclude, based on analysis using publicly available 
information, that the proposed deal raises significant 
competitive issues that could result in harm to consumers.
    I would like to make briefly just a number of major points.
    First, by way of overview, the merger comes in the wake of 
six major mergers in recent years. It will speed the 
transformation of the industry from one in which hubs were 
designed to accommodate multiple airlines to just a few large 
systems, one of which includes the legacy-like Southwest, which 
may not longer exert much significant competitive discipline. 
In this environment, low-cost carriers and regionals would have 
difficulty thriving. The merger will increase concentration at 
the national or systems level, enhancing the ease with which 
the big four carriers can tacitly coordinate on systemwide 
capacity tightening in order to maintain fares.
    Combining the two networks would also create functional 
strongholds throughout the U.S., including major airports on 
the eastern seaboard, in the Midwest, and West that are 
important for providing connecting service to eastern and 
western destinations.
    My second point is the importance of considering the 
effects of previous legacy mergers. The similarities between 
USAir and Delta/Northwest and United/Continental make a very 
strong case for why a postmortem analysis should inform this 
merger. Several routes affected by those deals are among the 
largest city pair markets in the U.S. Both mergers 
substantially eliminated competition on key hub-to-hub routes, 
many of which experienced the exit of low-cost carriers and 
regionals and also pre- to post-merger fare increases. Such 
post-merger effects have come under strong public scrutiny, and 
similarities between these and the USAir deal make a strong 
case for why the merger deserves a careful look.
    A third issue is that the combination is likely to affect a 
number of important route-level markets. Over one-half of the 
overlap routes potentially affected by the merger would be 
entirely or nearly monopolized. Similar to previous mergers, 
USAir would create a dominant firm that could raise fares and 
restrict service, particularly since the carriers are likely 
each other's closest competitors. The merger could also 
increase the risk that the remaining few legacies on affected 
routes could coordinate on fares or capacity, and low-cost 
carriers would no longer have as strong an incentive to 
maintain aggressive pricing.
    Fourth, low-cost carriers can no longer be relied upon to 
save the day for legacy mergers. The dwindling stock of LCCs 
make them increasingly unreliable as a source of competitive 
discipline in the industry. They may find it more difficult to 
enter and discipline legacy-dominated hubs. And in cities 
affected by the proposed merger where LCCs have a presence at 
secondary airports, that service may not provide good 
substitutes for consumers.
    Fifth, many mid-sized communities have seen flight 
frequencies reduced as a result of previous mergers. Evidence 
from previous deals indicates that carriers have driven traffic 
to large hubs, probably to feed global operations. That has the 
potential side effect of starving routes involving smaller 
cities.
    Choice and availability are very important variables in the 
antitrust analysis of transportation networks. Mergers that 
force consumers in smaller communities to use less convenient 
connecting service or travel longer distances to other airports 
are legally cognizable effects of a merger.
    Sixth, there is an ongoing debate over efficiencies in 
airline mergers. This includes economic analysis showing that 
cost savings dwindle as networks get larger and the effects of 
increased ``hubbing'' on congestion and costs. Post-merger 
system integration problems should also be considered since 
they impose costs on the merged company that may be passed on 
to customers.
    In network industries, it is tempting to sell a merger on 
the basis of ``out of market'' efficiencies or savings that may 
occur in a part of the system that is far removed from where 
competitive harm is inflicted. Given the magnitude of harm that 
could flow from this combination, efficiencies should be tied 
directly to adversely affected markets.
    Finally, the latest round of airline industry consolidation 
has been accompanied by carriers aggressively unbundling their 
prices--their products. However, price transparency for 
ancillary services is currently lacking. That means ancillary 
fees go largely undisciplined by market forces and prevent 
consumers from efficient comparison shopping for air travel 
offerings.
    The proposed merger would further reduce the rivalry that 
creates incentives for sellers to engage in price transparency, 
instead enhancing the ease with which airlines can tacitly 
agree on ancillary fees.
    In sum, the merging parties bear a heavy burden in 
demonstrating that their merger would not be harmful to 
competition and consumers.
    Thank you for this opportunity to testify, and I stand 
ready to answer your questions.
    [The prepared statement of Diana L. Moss appears as a 
submission for the record.]
    Chairman Klobuchar. Thank you very much, Dr. Moss.
    Mr. McGee.

STATEMENT OF WILLIAM J. MCGEE, CONSULTANT, CONSUMERS UNION, NEW 
                         YORK, NEW YORK

    Mr. McGee. Thank you, Chairwoman Klobuchar, Ranking Member 
Lee, and Members of the Subcommittee.
    This is not the first time in recent years that this 
Subcommittee is examining a merger between two major domestic 
network airlines and hearing the fears and frustrations of 
passengers as our Nation's commercial aviation industry becomes 
ever more concentrated. No doubt today's hearing is invoking 
deja vu for many of us here. Indeed, such hearings have become 
almost a biennial or triennial event over the past decade as we 
have watched the eight major network airlines of 2001 dwindle 
down to four in 2010. And if this merger goes through, there 
will be three. The US Airways brand will be retired, joining 
Continental, Northwest, America West, TWA, Pan-Am, Eastern, and 
the many others that have disappeared in the deregulated era.
    Once again we are being told that this merger is the key to 
saving the airline industry, that if only American and US 
Airways be allowed to join forces, order will be restored to a 
chaotic business, that an unprofitable industry will operate in 
the black, that consumers will be better served, and that 
somehow with fewer, rather than more, major airlines 
competition will be miraculously enhanced. Frankly, we are not 
so sure.
    We are concerned that allowing American and US Airways to 
combine could bring great harm to millions of airline 
passengers and numerous communities. We are concerned that 
there could be reduced service with fewer flights on some 
routes, elimination of nonstop service, and replacement of 
mainline jets with outsourced regional carriers, as has 
happened with past airline mergers.
    We are concerned that entire cities and even regions could 
lose the vital transportation links provided by hub operations. 
Analysts already are speculating about the future of US Airways 
hubs in Philadelphia, Charlotte, and Phoenix.
    Civic leaders can attest to how recent mergers have harmed 
communities that used to be served by TWA's former hub in St. 
Louis, America West's former hub in Las Vegas, Delta's 
shrinking hub in Cincinnati, and Continental's former hub in 
Cleveland.
    We are concerned that higher fares could result on routes 
where healthy competition is lost as fewer airlines mean less 
reason to resist fair hikes. Again, we have seen it happen with 
other airline mergers.
    We are concerned that service quality could fall as less 
competition means less incentive to innovate and improve. 
Compound that with the difficulties of uniting two work forces, 
two fleets, two operational systems, and two business cultures. 
Meanwhile, two frequent-flier programs would become one with a 
much larger pool of passengers fending for fewer available 
seats and upgrades.
    We are concerned that as the few remaining major airlines 
hunker down around their fortress hubs, it could become 
increasingly difficult for startup carriers to enter the market 
and provide effective new competition. And we are concerned 
that as the major airlines become bigger and fewer, they 
increasingly will be regarded as ``too big to fail.''
    We have witnessed an incredibly shrinking airline industry 
in the years since the Federal Government gave the airlines a 
$5 billion bailout in 2001, and each successive merger just 
raises the stakes. Could the President or Congress stand idly 
by if a bankruptcy filing, a labor action, a safety violation, 
or some other event threatens to disrupt up to 25 percent of 
our Nation's commercial airlift?
    We are also concerned about where this is all heading. Will 
consolidation stop at the water's edge, or will the laws 
prohibiting foreign ownership of U.S. airlines be repealed so 
that soon we are discussing proposed mega mergers between U.S. 
carriers and British Airways or Lufthansa or Air France/KLM?
    We are pleased that the Justice Department's Antitrust 
Division is investigating, and we hope this Subcommittee will 
encourage and support a thorough investigation. We do not 
prejudge the legality of this merger. The airlines should have 
a full opportunity to make their case to the Justice 
Department. But as we explain in greater detail in our written 
statement, assurances from the airlines should be regarded with 
skepticism if they run counter to the airlines' profit-making 
business incentives. There is no substitute for competition to 
keep an airline from raising fares and reducing service if 
doing so will increase its profits.
    A merger of this magnitude can dramatically change the 
structure of the market and fundamentally alter profit-making 
incentives in ways that take them further away from keeping 
fares low and improving service.
    At the conclusion of its investigation, we hope the Justice 
Department will fully explain its reasons for whatever actions 
it concludes is called for so there will be no room for doubt 
that we are being fully protected under the law.
    Our commercial airlines are as vital to America's economy 
and security as our telecommunications networks and our 
interstate highways. The stakes could not be higher for airline 
passengers facing fewer and fewer choices in a market that has 
become ever more concentrated.
    Thank you. I will be happy to answer any questions you may 
have.
    [The prepared statement of William J. McGee appears as a 
submission for the record.]
    Chairman Klobuchar. Thank you, all of you, for your 
thoughtful testimony.
    I want to start with you, Mr. Parker and Mr. Horton. The 
most basic concept of antitrust law is that when there are 
fewer competitors to get customers' business, what happens is 
that prices tend to rise, services tend to decline.
    As you know and as pointed out by Dr. Moss and Mr. McGee, 
we have a great wave of consolidation in the airline industry 
over the past 5 years. With this merger we would be down to 
only three network carriers.
    In your view, what is the minimum number of network 
carriers necessary for a competitive market? Would two be 
enough? What is the tipping point? And how would you argue that 
your merger in any way defies the basic concept that we see 
prices go up and services decline?
    Mr. Horton. I will maybe start. We think that this enhances 
competition and that it creates another global airline on par 
with Delta and United. So it creates a competitive 
counterweight to those two big airlines.
    And, indeed, you know, the new American will compete in a 
global marketplace, so we do not just compete with Delta, 
United, Southwest, Jet Blue, the low-cost carriers here at 
home; but we also compete with the likes of Lufthansa and 
Emirates and Singapore around the world. So we think this is 
about creating a more competitive industry.
    Chairman Klobuchar. But it is true that since 2000, there 
has only been one new carrier, I think, in our country--Virgin 
America--that has entered. And when you mention these other 
carriers, I think the concern is--we have Sun Country in 
Minnesota. We are proud of them. But there really has not been 
a new carrier that has been viable since the year 2000. Don't 
you think there are many barriers to entry that make it hard 
for new airlines to get in to compete?
    Mr. Horton. I think if you look over the last many years, 
there have been new entrants into the industry. Jet Blue is, of 
course, a great example of a company that sprang up the early 
part of the last decade and has been very successful and grown 
nationwide. So I think there are ample opportunities and 
capital available for new airlines to enter the market.
    Chairman Klobuchar. I note that Jet Blue is only 5 percent 
of the market, though, and we have now these three major 
carriers.
    Mr. Parker, do you want to respond?
    Mr. Parker. I would just add to Tom's comments and say, 
first off, again, noting how complementary our two networks 
are, so by putting our two airlines together we create a third 
competitor to--actually, a fourth competitor to what are now 
three airlines larger than ours--United, Delta, and Southwest. 
And it allows more competition, not less, only 12 routes 
overlapping out of 900. By putting these two networks together, 
we will be able to provide better service, more efficient 
service to consumers.
    I would also note that in the $1 billion of synergies that 
I noted in our analysis, there is not one assumed fare increase 
in there. The synergies are not built upon assumed fare 
increases, rather on what I just said, putting two networks 
together that allow us to attract more customers and to attract 
customers in a more efficient way.
    And then the only other note I would make on the barriers 
to entry, the reality is that, you know, there are no barriers 
to entry today in this industry that are new in the past. I 
think capital is a barrier to entry. This is a very tough 
business where the legacy airlines have struggled for many 
years to actually return--to make a return on capital. Those 
that have have been more low-cost carriers. And I would note 
that those that exist today are growing much faster than the 
legacy airlines are, than the network carriers are, the 
Allegiants, the Alaskas, Hawaiian, Spirit, Virgin America, 
Frontier, Jet Blue, Sun Country. That is where all the growth 
is. And while there may not be any new ones added of late, 
there are plenty out there. It is an intensely competitive 
business, and this just allows us to compete better against 
those airlines.
    Chairman Klobuchar. Okay. And as we know, a lot of that 
competition tends to be between these major metropolitan areas, 
and that is a concern I think Dr. Moss did a good job of 
raising, and that is this idea that for these mid-sized major 
metropolitan areas, they are not seeing as much of that 
competition, and just hear me out on this recent study.
    A research engineer from MIT's International Center for Air 
Transportation found that between 2007 and 2012, nearly 1.7 
million yearly departures were removed from the U.S. domestic 
system, and that a disproportionate share of cutbacks happened 
in non-large hub airports. We are talking about the non-L.A., 
non-New York. Only 40 percent of U.S. departures last year were 
flown in non-large hub markets compared with 44 percent in 
2007. Network carrier flights were cut on average by 27 percent 
in smaller U.S. airports. Pittsburgh, which I mentioned before, 
is a good example of that. They are adding headquarters and 
their economy is actually picking up, but they have seen a 
number of these flights go down and the loss of service after 
the US Airways/American West merger.
    So in your testimony, you make a renewed commitment to 
serve small and medium-sized communities, where appropriate, 
increase service and additional destinations. Can you please 
explain the qualifying language and get at this issue of while 
there is competition in these major cities, in many of our mid-
sized cities we are seeing less?
    Mr. Parker. Yes. Let me go first, Tom.
    I was happy to hear your comments that you believe that 
service to mid-cities is more important than ever. We agree. 
And what I would like to point out is the way that those cities 
are served is through hub-and-spoke carriers. The way that mid-
sized and smaller communities receive air service is by having 
hub-and-spoke airlines like US Airways, like American, that fly 
into those cities and then connect people on to other markets. 
There is not enough demand in many of those cities for nonstop 
point-to-point service. It needs to fly through hub-and-spoke 
carriers.
    So in order for us to better serve small and mid-sized 
communities, we need strong and vibrant hub-and-spoke carriers, 
and that is what this merger does. It takes two strong hub-and-
spoke carriers, but builds one that is even stronger and 
provides even more connections. It allows, for example, for the 
people of Rochester, Minnesota, to now connect on the new 
American Airlines to Hilton Head, South Carolina. US Airways 
does not fly to Rochester. American does not fly to Hilton 
Head. But together we will. And it provides more connections 
for people in communities like that, and there are 1,300 such 
examples like that in this merger, people that do not have the 
ability to connect between two cities that now will in 1,300 
different examples.
    Chairman Klobuchar. Okay. I am going to ask just one more 
question, mostly because I am afraid Senator Schumer will ask 
this question if I do not when he comes, because we both have 
worked a lot on these fee issues. And I think that it was 
brought up by our witnesses here on the right side of the table 
that there are issues with transparency with these fees. In 
fact, I cited in my opening statement that we have seen $10 
billion in 2012 alone for things like baggage fees, change 
fees, seating fees. And while we look at how these mergers in 
the airline industry have affected prices and there can be 
arguments that some ticket prices have gone down but the fees 
have been going up. And I think Dr. Moss was arguing that these 
mergers might make it even more difficult to make it 
transparent and how do you respond to that. And then I will 
turn it over to Senator Lee.
    Mr. Horton. Maybe I will kick it off, Doug. We think that 
the unbundling of fares that you cite has actually been 
constructive and good for customers because it allows them to 
select the services they want and pay for what they want, and 
those who do not want to have to pay for bags or other things 
do not have to pay for that and can just buy the base fare. In 
fact, one of the most successful low-cost carriers, Spirit, has 
taken that approach to a whole new level.
    I would say about fares in particular, you know, fares have 
been--fare increases, including fees, have been very 
restrained. So if you go back to the early part of the last 
decade, go back to 2000, airfares, including fees, are up about 
20 percent. Fuel prices are up 3 times, almost 3 times. And 
that 20 percent is less than the actual rate of inflation. So 
we think the airline industry has done a pretty good job of 
providing value even in the face of sharp increases in input 
costs.
    Chairman Klobuchar. And on my next round, I will let you 
guys respond to that, but I will turn it over to Senator Lee. 
Thank you.
    Senator Lee. A number of commentators have expressed 
concerns about the impacts that the proposed merger could have 
on certain so-called hub airports. For example, the new merged 
combined American Airlines would have nearly 70 percent of the 
available slots at Reagan National Airport. Critics suggest 
that this combined power could allow the new American Airlines 
to raise prices because competitors would not be able to 
compete effectively in those airports. So I have got a couple 
of questions for Mr. Horton and for Mr. Parker on this point, 
and I will ask you to answer these in that order on each of 
these.
    Given that Reagan National Airport is known as a closed 
airport, one in which the number of slots is fixed and it is 
unlikely to change, at least anytime in the immediate 
foreseeable future, would American's dominant share of 
available slots give it, in your opinion, an undue advantage in 
the marketplace that could lead to increased prices as a result 
of that undue influence on the market?
    Mr. Horton. Well, we do not think so, and that is because 
the Washington area, of course, is served by three airports, 
and if you look at the market as a whole, taking into account 
all three airports, the new American would have something on 
the order of 25 percent of the capacity. So we think it is a 
robust and competitive marketplace.
    Senator Lee. Mr. Parker.
    Mr. Parker. I agree completely. I would point out, even in 
Reagan the number of slots I do not think is the right measure 
to look at for capacity. It is actually the number of seats. 
Because we serve so many small and mid-sized communities out of 
Reagan versus our competitors, the number--while we have about 
two-thirds of the slots at Reagan, we have about 50 percent of 
the seats. And as Tom notes, this is a market that is intensely 
competitive, not just because of Reagan but because of 
Baltimore--because of BWI and Dulles. And when you add those 
together, the new American would be smaller than United, about 
the exact same size as Southwest Airlines in this market.
    Senator Lee. You are not suggesting the slot question is 
irrelevant, though? You are just suggesting it is perhaps 
mitigated by the number of seats?
    Mr. Parker. Oh, absolutely not, I am not suggesting it is 
irrelevant. It is an issue that should be addressed, and we are 
happy to have it addressed. I believe that as the Committee and 
the Justice Department look at the slot issue, they will come 
to the same conclusion we have, which is the slots that are 
utilized by--that will be utilized by the new American are used 
to provide service to smaller communities, that if other 
airlines were given those slots, they would not go to similar 
size communities, they would be flown to larger markets. I 
think that would be bad for consumers.
    Senator Lee. Okay. The second part of my question on this 
slot issue relates to what happened last year when USAir and 
Delta executed a swap agreement for a number of slots at 
LaGuardia and at Reagan National. I believe USAir, in 
connection with that agreement, had to give up 16 slots at 
Reagan, capping USAir's market concentration at 55 percent. So 
that leads to the question in my mind: How many slots is the 
merged entity prepared to divest? And would you support having 
another FAA blind auction for those slots?
    Mr. Parker. We do not believe it would be good for 
consumers for us to divest any slots. Again, if US Airways or 
the new American were asked to divest slots, we would, by 
definition, divest those that are the least lucrative to the 
airline. Those would tend to be service to smaller communities, 
to mid-sized communities--that we enjoy serving, that we want 
to continue to serve, but we would be precluded from serving 
it. Those slots would go to another carrier that--the slots 
that you mentioned, by the way, that were auctioned off, Jet 
Blue acquired those. They now serve with those Tampa, Florida, 
Orlando, San Juan--very large communities. That is where 
additional slots divested from us would likely go to, very 
large communities, and small communities would be disserviced.
    Senator Lee. With flights to airports that are already 
getting a lot of service, in other words?
    Mr. Parker. Pardon me?
    Senator Lee. With flights to airports that are already 
getting a lot of----
    Mr. Parker. Already intensely competitive, already have a 
lot of service, yes, sir.
    Senator Lee. Mr. Horton, do you have anything to add to 
that point?
    Mr. Horton. I think the trading of slots is representative 
of a dynamic, competitive marketplace. And, in fact, American 
leases some DC slots to Jet Blue, and Jet Blue leases some 
slots at JFK to American. So I think it is reflective of a 
dynamic and competitive marketplace.
    Senator Lee. The 2010 Horizontal Merger Guidelines state: 
``A primary benefit of mergers to the economy is their 
potential to generate significant efficiencies and, thus, 
enhance the merged firm's ability and incentive to compete, 
which may result in lower prices, improved quality, enhanced 
service, or new products.''
    At the same time, the guidelines also make clear that 
antitrust officials should credit merger-specific efficiencies, 
that is to say, those efficiencies likely to be accomplished, 
with the proposed merger and unlikely to be accomplished in the 
absence of either the proposed merger or another means of 
having comparable anticompetitive effects, only in those 
circumstances.
    So what merger-specific efficiencies would you anticipate 
from this transaction?
    Mr. Horton. Well, Senator, as I described earlier, American 
Airlines has embarked on a very successful restructuring here 
to reduce our costs, reduce our debt, and indeed, create a 
vibrant and competitive airline.
    Our restructuring has been unique in that it has really all 
been about renewal and growth built on our new order for 
aircraft or 500 airplanes on order. So it has really been about 
building and growing creating a new global competitor.
    We view the merger with US Airways very much as an 
extension of that, and so as a consequence, we see a much more 
efficient airline going forward. And there will be efficiencies 
to be had in the combination of the two airlines as we think 
about putting together the headquarters staff, the IT systems, 
and those sorts of things.
    Senator Lee. The guidelines also make clear that the 
efficiencies that have resulted that have been proven from past 
mergers are those that are most likely to be credited. Can you 
point to any efficiencies that have been obtained as a result 
of past mergers, for example, from the American/TWA merger of 
2001 that can support your argument there?
    Mr. Horton. Sure. Really the most obvious and clearest is 
that you do not need two headquarters functions, so you can 
largely eliminate that redundant staffing.
    Senator Lee. Anything to add to that, Mr. Parker?
    Mr. Parker. Yes, well, I think we have efficiencies both 
for consumers in the ability to connect to more markets much 
more efficiently--as I noted, you know, markets such as 
Rochester to Hilton Head, markets such as Dubuque to Yuma--that 
customers cannot get to on either American or US Airways today 
that they would now be able to connect efficiently on. Those 
are real efficiencies that drive the majority of the synergies.
    On the cost side, as Tom noted, we receive other 
efficiencies, things like management reductions, IT systems 
that we are able to consolidate; you know, two systems become 
one; facilities in certain airports where, you know, we happen 
to be in different parts of the airport, we consolidate. Those 
are the largest cost efficiencies. But it is primarily revenue 
driven by getting more customers onto the combined airlines 
than either of us can generate independently by being more 
efficient.
    Senator Lee. Thank you.
    Mr. Parker. Thank you.
    Chairman Klobuchar. Thank you. I just have one followup 
question to Senator Lee's good round of questions about the 
slots at Reagan.
    Mr. Parker. Yes.
    Chairman Klobuchar. And he has rightly pointed out, the 
combined airline would have up to 67 percent or 70 percent of 
the slots. He asked you some questions about divesting, and you 
rightly pointed out that sometimes these slots go to airlines 
that then fly to major metropolitan areas as opposed to serving 
some of the hubs that I voiced my concern about.
    Well, what if all this happened, what if the DOJ required 
the purchaser of the divested slots to serve unspecified small 
or medium-sized markets? Wouldn't that be a way of getting 
around it?
    Mr. Parker. Well, they would probably have to be 
subsidized, because the fact of the matter is we at US Airways 
could not serve those markets if we did not have a hub to 
connect passengers over. There is not enough demand in those 
small communities for point to point traffic alone. We would 
not be able to serve the smaller-community markets without the 
connections that we have across the DC hub. So without those 
connections, I cannot imagine how an airline would be 
profitable serving those routes.
    Chairman Klobuchar. How about if it was medium-sized 
markets? It might be a little different?
    [Laughter.]
    Mr. Parker. Okay, look. We would have to look at it 
market----
    Chairman Klobuchar. No, seriously----
    Mr. Parker. We would have to look at it market by market, 
Senator----
    Chairman Klobuchar [continuing]. Small towns, but not every 
flight going to L.A.
    Mr. Parker. Again, we are happy to discuss this and work 
through it. I just will tell you my concern, is that any 
airline that is promising they will fly to those routes will 
not be able to be profitable and will not be there long because 
they do not have the connections that we have at US Airways 
that makes it profitable. So, therefore, any mandate that 
someone serve those routes I would suggest would be very 
difficult for them to honor over time because they would not 
have the connections that the new American will have over DC.
    Chairman Klobuchar. Okay. Dr. Moss, do you want to respond 
to that?
    Ms. Moss. Yes, I think a couple of points are worth making.
    First of all, any slot divestitures that would be sought by 
DOJ, potentially sought by DOJ as a remedy for competitive 
concerns and issues, if they are small and non-lucrative-
related divestitures or relate to small and non-lucrative 
markets, then they are not, according to the Horizontal Merger 
Guidelines, as Senator Lee points out or has referenced, those 
are not particularly good candidates for divestiture.
    The whole purpose of divestiture in a merger is to identify 
assets that are viable assets, that are viable, robust assets 
that, if they were spun off to a different party in the market, 
whether it is an incumbent or a new entrant, would be able to 
maintain robust competition in the market. Divesting assets 
that feed small communities I think is--those are not 
particularly viable assets, as we have just heard, and thus do 
not make particularly good divestitures to cure competitive 
problems at these hubs where we see increased levels of 
dominance.
    Chairman Klobuchar. Okay. Thank you.
    Mr. McGee.
    Mr. McGee. Yes, thank you. I think there is another point 
to be made when we are discussing slots, particularly at slot-
constrained airports like Washington National, LaGuardia, 
O'Hare, Kennedy, and that is, how are the network carriers 
using those slots? A Department of Transportation Inspector 
General report a few months ago pointed out that 61 percent of 
all domestic departures for the four largest network airlines 
in the United States--that is American, United, Delta, and US 
Airways--61 percent are now outsourced to regional carriers. So 
that is a staggering statistic when you put that in 
perspective, that six out of every ten departures are regionals 
operating on behalf of the four largest, not mainline service.
    So, you know, the Regional Airline Association boasts that 
most of the departures between Washington and New York every 
morning--obviously no one could call those underdeveloped 
markets or rural markets--are operated, in fact, by regionals. 
And so the question is: Are we using these slots, you know, to 
their full maximum? And, you know, obviously the increased 
reliance on regional carriers raises all kinds of issues, not 
just about service and safety but about the best use of public 
resources and, of course, environmental effects as well.
    Chairman Klobuchar. Okay. Thank you.
    Senator Grassley. Yes, I am going to use part of my 7 
minutes to make a little statement before I ask questions.
    Currently, there are two airlines serving five airports in 
Iowa. There will be some benefits to the proposed US Airways/
American Airlines merger. However, the merger needs to be 
evaluated to determine that the transaction will not 
consolidate airlines so as to inhibit fair competition.
    A question, rhetorical: What is the effect on air travelers 
in small cities and rural communities both in terms of costs 
and services? That is a big issue for me.
    Iowans ask me about the availability of flights, about more 
options in terms of air carriers that serve Iowa and about 
reasonable and competitive airfares. Specifically, I am 
concerned that this merger could potentially lead to key route 
eliminations to Iowa, and there are some of these key routes 
that I am really interested in.
    Competitive air service is directly related to the economic 
prosperity of our smaller and rural communities. Now that we 
have a weakened economy, even the threat of route elimination 
and cutbacks in services or higher airfares can be harmful to 
these communities and their economic development.
    The U.S. trustee in American Airlines' bankruptcy has 
objected to the terms of management compensation. I have had 
concerns with multi-million-dollar payouts to executives in 
previous bankruptcies while they were going through that 
process. The trustee should see that these types of payments 
are being scrutinized so that they meet the Bankruptcy Code's 
standard.
    Now to my questions, and it is all about travel and 
competition. Tell me about the impact--and these will be to 
both Mr. Horton and to Mr. Parker. Tell me about the impact of 
the proposed merger on services to my State of Iowa. How will 
the merger impact specific routes? And are you envisioning any 
reduction or elimination of flights to any of the Iowa cities 
currently serviced by your airways? We will start with you, Mr. 
Parker.
    Mr. Parker. Thank you, Senator. No, we are not--again, 
because these two networks are so complementary, as we put 
these two airlines together our intent is to keep all the 
airplanes, keep all the people, retain service to all the 
markets we serve today independently, and just do--and because 
of that, that is where the value is created, actually, is by 
putting the two networks together that exist today and being 
able to connect more people to more places.
    Senator Grassley. Mr. Horton, have you got anything to add?
    Mr. Horton. I would just add, Senator, that we have been 
proud to serve Iowa for decades, as I think you know, and we 
would plan to serve Iowa for many decades to come.
    I do think it is important to point out for small 
communities having American and US Airways come together as the 
new American is actually helpful. And the reason I say that is, 
you know, American Airlines today has some 240 destinations 
around the world. Combined, the new American will have some 340 
destinations. Those are just more points that we can serve out 
of small communities, and that just creates more traffic flow 
and, therefore, makes those markets more durable in the long 
run.
    Senator Grassley. Okay. What are the opportunities, if you 
have gone this far in your thinking about the merger, under the 
combined airline for any increased services to Iowa 
communities?
    Mr. Parker. Well, as Tom stated, again as we put the two 
networks together, it provides opportunities because we now 
have more hubs for more service to differing cities. Nothing as 
of yet that we have planned, Senator, but as you optimize 
networks, it certainly creates more opportunities than American 
had independently because you now have the US Airways network 
to combine with, there is already service to that city. So it 
certainly provides more opportunities for growth.
    Senator Grassley. Okay. Mr. Horton, I will ask you the next 
question because, obviously, if you folks are talking mergers, 
you probably have got the same idea about what it will have on 
the questions I am asking. So what is the impact on airfares 
for Iowa travelers? And that question could be asked for a lot 
of rural communities not only in my State but a lot of other 
States?
    Mr. Horton. Well, Senator, I think that is an important 
question. It is the right question. In our view, this is 
creating enhanced competition in the U.S. because today you 
have two really big global airlines--United and Delta--and this 
creates a third as a competitive counterbalance to that. And, 
of course, we have Southwest who today is a very large carrier 
in the U.S. So there is a lot of competition, but we think this 
creates competition on a global scale that did not exist 
before.
    With respect to airfares, as I mentioned earlier, I do 
think it is important to look at the record, and the record 
over the past decade or so since these mergers have taken place 
is one where airfares, including fees, have actually grown less 
rapidly than the rate of inflation. At the same time, you know, 
oil prices have risen dramatically.
    So I think the industry has done a pretty good job of 
keeping a cap on fares.
    Senator Grassley. Beyond the questions I have already asked 
you and the answers you have given, could you tell me, as you 
study your merger, what other specific benefits my Iowa 
constituents will see on the proposed merger if it goes 
through?
    Mr. Horton. I will give you one simple example, which I 
think everybody here can appreciate. Most of us are probably 
members of frequent flier programs. The new American/US Airways 
combined frequent flier program will have 100 million members, 
so that is 100 million people who are now going to have more 
utility, more ability to earn and burn those frequent flier 
miles across a much broader network, 300 destinations 
worldwide, 6,700 flights a day. So that is an improvement for 
100 million people.
    Senator Grassley. Do you have anything to add?
    Mr. Parker. Yes, just connecting markets, Senator. You 
know, as you have noted, American today serves a number of 
cities that are not served by US Airways: Dubuque, Sioux City, 
Cedar Rapids, Waterloo, all served by American, not served by 
US Airways. However, American does not serve Yuma or Flagstaff, 
which US Airways does. So you cannot get from Dubuque or Sioux 
City to Yuma or Flagstaff. You will be able to now. You will be 
able to get to Burlington, Vermont. Those citizens of Iowa will 
be able to get to places they could not get to before because 
the US Airways network has markets that American did not have, 
and US Airways now will be able to--will have markets that 
American did not have.
    Senator Grassley. Thank you, Madam Chairman.
    Chairman Klobuchar. Thank you, Senator Grassley.
    Senator Schumer.
    Senator Schumer. Thank you. First, I want to compliment our 
Chair on her first hearing since assuming leadership of this 
extremely important Committee. It is shaping up to be a good 
one.
    Second, I want to tell her, no, I am not going to ask about 
baggage fees. I trust----
    [Laughter.]
    Senator Schumer. I trust my colleagues in the airline 
industry will continue to keep the promises they have made to 
me and others, and that is good. So I am going to ask much more 
about New York concerns today.
    US Airways and American are both very important airlines to 
the State of New York. Both companies service not only our 
downstate hubs but also the somewhat smaller though equally 
important regional airports throughout the State.
    I have two priorities with respect to this merger.
    First, it is critically important to me that New Yorkers 
continue to have access to a wide breadth of options for 
services to and from our airports, like Buffalo, Rochester, 
Syracuse, and Islip; and then the smaller--and Albany. And then 
our smaller airports, like Binghamton, Ithaca, Newburgh, 
Watertown, Elmira, as well as, of course, the metropolitan 
airports of Islip, Westchester, JFK, and LGA. So we have a lot 
of issues out there.
    Second, it is equally important that service is competitive 
in terms of both the cost and quantity of the flights. In any 
situation where the number of players in a market is reduced 
due to consolidation, we need to look very carefully at the 
consequences that consolidation will have on competition, jobs, 
and service to consumers, and this merger is no different. The 
consolidation should only be cleared for take-off if we can be 
sure it would not mean higher fares or poorer service or a 
reduction in New York jobs. And I am sure many of my colleagues 
feel the same way about the issues in their States.
    So I would like to ask you, Mr. Parker, a few questions 
about what New Yorkers can expect from a combined US Airways/
American Airlines. I would ask you to keep the answers brief, 
and I do want to say you have always been accessible and open 
to the concerns that we have had, which I very much appreciate.
    American, when you left New York, it was sad.
    [Laughter.]
    Mr. Horton. We left New York, Senator.
    Senator Schumer. Yes. But you have a large commitment to 
New York, and we very much appreciate that.
    So, first, to Mr. Parker, will you commit to maintaining 
New York jobs of both US Airways and American Airlines? You 
have a huge presence, both airlines, in our State.
    Mr. Parker. Right. Yes, thank you, Senator, and thanks for 
the recognition of our commitment. We love flying in and out of 
New York. We love working with you, and we will continue to do 
so. As we have said, this merger is about putting together two 
networks that are highly complementary and not reducing 
service. We have commitments to that to our employees through 
no-furlough contracts--through no-furlough commitments. We are 
happy to make those commitments because we have no intention of 
reducing service.
    Senator Schumer. That is super. Okay. Well, you answered 
the second one. Will you commit to maintaining service at the 
locations across New York State which are currently serviced by 
your two airlines?
    Mr. Parker. Yes, sir.
    Senator Schumer. Great. Will you commit to maintaining JFK 
as a hub for American?
    Mr. Parker. Yes, sir.
    Senator Schumer. Great. Okay. So that is great, and you 
have told me--both of you have told me those answers face to 
face. I am glad to get them on the record and very much 
appreciate it. Companies are good when they are efficient. We 
just want to make sure there is enough competition still out 
there and that there is enough service.
    The second question relates to National Airport, because 
the other aspect of the merger that has garnered a lot of 
attention is National Airport here in DC. Currently, US Airways 
provides service between DCA and several regional New York 
airports: Buffalo, Rochester, Syracuse, and Islip. As I 
understand it, a combined US Airways/American would control 
more than 60 percent of the slots at National. And I have heard 
serious concerns expressed by one of your competitors, a New 
York company, Jet Blue, about the market dominance of a 
combined USAir/American, so I would like to enter a letter they 
sent to me on the topic with some specific New York information 
into the record, Madam Chair.
    Chairman Klobuchar. Without objection, so included.
    [The letter appears as a submission for the record.]
    Senator Schumer. And now I have a few questions about DCA 
specifically.
    Last year, when US Airways and Delta executed a slot swap 
agreement for slots at LaGuardia and National, the FAA required 
US Airways to give up 16 slots at Washington National, which 
captured a market, I think, at 55 percent. Given that a 
combined US Airways and American would control significantly 
more, it would seem that you would need to divest slots in 
order to ensure competition. And I understand the Ranking 
Member and the Chair asked about slots, but I would just like 
to hear it again. What is your position on slot divestiture? 
How many slots does US Airways propose to divest? And would you 
support an FAA blind auction?
    Mr. Parker. Yes, Senator, we would not propose divesting 
any. We believe that would not be good for competition. But we 
understand it is of interest, that DCA is of interest, and we 
will continue to work with this Committee and with the 
Department of Justice to make our case and listen to other 
views.
    Senator Schumer. Okay. Well, one of my concerns is--and I 
think you mentioned it--that you might give up the slots to 
serve the regional airports, an airport like Islip where you 
have pretty good service right now. You did not mention Islip, 
but regional airports.
    Mr. Parker. I did not.
    Senator Schumer. So I want to make sure that your 
obligation to allow competition of DCA and your obligation to 
serve regional markets, you do not feel they are mutually 
exclusive.
    Mr. Parker. Well, we absolutely do need slots to fly in and 
out of DC, and absent slots, it will certainly result in a 
reduction in service somewhere, Senator. But, again, we are 
happy to work through this and talk to others. We were happy to 
work with you to start the Islip successful. We are happy to 
have that service. We do well in those markets. We would like 
to continue flying all the places we fly out of DC. We 
obviously would not be able to do that if we did not have all 
the slots we have today.
    Senator Schumer. Great. Okay. One final question. Much of 
the service USAir operates is utilizing small regional 
aircraft, but not only for what we agree is important service 
to small communities, where small aircraft are necessary; these 
large aircraft slots are often being used to fly smaller 
aircraft to larger airports. So if you could elaborate on this. 
What is the breakdown--and you can submit this in writing if 
you do not have it at your fingertips--of small aircraft versus 
large jets running service from DCA to larger airports? And 
what can you say to assure us that with a combined airline you 
will not use small aircraft in large aircraft slots in a way 
that would further reduce capacity and competition by reducing 
the number of available seats, driving up prices paid by 
consumers?
    Mr. Parker. Okay. We will submit that in writing. I will 
just note in addition to Mr. McGee's comments that the smaller 
aircraft allow us to serve smaller communities.
    Senator Schumer. Yes. That is good.
    Mr. Parker. And any effort to reduce the number of small 
aircraft flying around is going to be inconsistent with the 
Committee's desire to seek service to small communities. But we 
will submit to you in writing----
    Senator Schumer. You just do not want to see the small 
planes go into the large cities and neglecting the smaller 
cities.
    Mr. Parker. Understood.
    Senator Schumer. That is all. Does that make sense to you?
    Mr. Parker. Yes, sir. We will submit it to you in writing. 
Yes, sir.
    Senator Schumer. Thank you, Mr. Parker and Mr. Horton, and 
I thank the other witnesses for their being here and their 
testimony as well.
    Mr. Parker. Thank you, Senator.
    Mr. Horton. Thank you, Senator.
    Chairman Klobuchar. Thank you, Senator Schumer.
    Senator Flake.
    Senator Flake. Thank you. I want to just say what a 
pleasure it has been to have US Airways headquartered--first 
America West and now US Airways in Phoenix, in Arizona. We have 
benefited tremendously from it. You have been great corporate 
citizens. Great to see you here, Mr. Parker, and Mr. Johnson 
behind you, and other pilots that I have flown a lot with, and 
flight attendants and others.
    All of us have experienced in elementary school when your 
best friend moves away, this time to Dallas, and with all these 
promises that they will write or that they will visit and 
everything else----
    Mr. Parker. I am going to write you, Senator.
    [Laughter.]
    Senator Flake. But, you know, the thing I was never able to 
do at that time was put our friends under oath.
    [Laughter.]
    Senator Flake. And we have managed to do that here.
    Mr. Parker. Noted.
    Senator Flake. But I know that promises are promises, and 
you have to--you know, the reason mergers happen, there are 
economies of scale that have to be taken into account. But 
certainly in Arizona we are concerned, obviously, about the 
level of commitment that has been there and that it will be 
maintained. Particularly, it is a little concerning when you 
have as major hubs Dallas, Los Angeles, and Phoenix. How will 
you manage that? It seems that the proximity of those hubs is 
close enough that it is going to be difficult to maintain the 
same level of service.
    Mr. Parker. Okay. Well, thank you, Senator, and thank you 
for the remarks. I love Arizona like you do, and what I am 
happy to report to you is this merger is good for Arizona, much 
like when we merged America West and US Airways, and the people 
of Arizona at the time were a little worried about what it was 
going to mean to America West Airlines and the service they had 
there. It just made it better. Because of the merger of America 
West and US Airways, we gave the people of Arizona more 
opportunities to fly more places. This merger is going to do 
that yet again.
    The Phoenix hub is a critical piece of US Airways' 
profitability. It will be a critical piece of American 
Airlines' profitability. We will just be able to provide more 
service to the people of Arizona, and I feel really very, very 
good about that.
    The headquarters issue is one that is always difficult in 
situations like this, not one that we took lightly, of course, 
but one that we had--you know, we did what we needed to do to 
make sure that this was--you know, we have to pick one. And the 
reality is American Airlines has been headquartered in Dallas-
Fort Worth for quite some time, and we thought that was the 
right place to keep the American Airlines headquartered. But, 
again, not done lightly. We expect to retain a large corporate 
presence in Tempe as well. We have just renewed our lease on 
our headquarters, and we expect to maintain that facility and 
have it fully staffed with management personnel, because we are 
committed to Arizona. We are committed to the community. We 
will still be a huge partner in the community. I assure you I 
will still be coming to visit you and your colleagues because 
we love Arizona and it is important to us.
    But it is also the right business decision. The Phoenix hub 
is extremely important. Dallas, by the way, as you know, is 900 
miles away. And the L.A. situation is just a very different 
type of flying. American uses Los Angeles largely as a gateway 
to Asia. It is about half the size of the connecting hub, the 
connecting facility that we have in Phoenix. So they are 
completely complementary, and we do not see any reason that 
anyone in Arizona should be concerned about the merger. Indeed, 
I think it is very good for Arizona.
    Senator Flake. In Phoenix, the taxpayers of Phoenix have 
spent considerable money upgrading facilities at Sky Harbor 
with the Sky Train and other things, and I know there is 
concern with this merger, that that will continue. You have 
talked some about it, but can you talk about any growth 
opportunities that exist out of the Phoenix hub with this 
merger?
    Mr. Parker. Well, again, what I can tell you right now is 
the plan is to put the two airlines together as they currently 
exist, and we are--you know, growth is obviously something in 
the future that is harder to predict. What I can tell you is 
whatever growth opportunities exist today in Phoenix, they are 
greater with this merger because there are so many more markets 
that American serves that we do not. There are international 
possibilities that I know are very important to the State that 
we have not been able to accomplish at US Airways on a stand-
alone basis that become more viable now with the combination 
with American. Again, no promises on that, but they are much 
more viable than they were with US Airways stand-alone.
    So I think there is a lot--the potential for growth is much 
greater. I am certain of that.
    Mr. Horton. Senator, I would just add to that, you know, 
American is a founding member of the oneworld Alliance. I am 
the chairman of oneworld. And one of the things we have found 
over the years is that we tend to flow oneworld international 
connections into our big hubs in North America. So I think down 
the road those are the sort of opportunities we would want to 
have a look at as to whether, you know, companies like BA and 
Japan Air Lines and others would have opportunities to put 
flights into US Airways' hubs that are now part of the new 
American.
    Senator Flake. There has been a lot of talk about the DCA 
slots here. How will that relate with this merger in terms of 
slots--or flights between Phoenix and DCA?
    Mr. Parker. I do not believe it will have any impact. 
Those, as you are well aware, Senator----
    Senator Flake. That was self-interested question.
    [Laughter.]
    Mr. Parker. I have seen you on the flight several times. 
But you have also helped the people of Arizona get those 
flights, which we appreciate. Those are exemptions, beyond-the-
perimeter rule, and, again, I do not believe--although I guess 
it is up to the Justice Department to decide--that those are at 
risk.
    Senator Flake. Right. Well, thank you. I am out of time.
    Thank you, Madam Chair.
    Chairman Klobuchar. Thank you very much, Senator.
    Senator Blumenthal of Connecticut.
    Senator Blumenthal. Thank you, Madam Chairman, and my 
congratulations and thanks to you for your first Subcommittee 
hearing, and thank you to all of the witnesses for being here 
today and for your cooperation, both Mr. Horton and Mr. Parker, 
in providing information leading to this hearing.
    I think the concern here really is with the impact on 
consumers and passengers, not only from our States but others 
around the United States, and obviously the picture is bigger 
than just the industry insofar as it is here today. It really 
is a global issue where we confront competition in the United 
States against airlines that are, in effect, creatures of their 
governments. They are subsidized by their governments. They 
compete unfairly. And I use that term advisedly, not in a legal 
sense, but in the sense of their ability to use the vast 
resources of their governments to, in effect, buy new airplanes 
and set prices that are unfair to our airlines, which I think 
is one of the reasons why we have seen consolidation and 
increasing concentration in the industry and the creep of 
consolidation that threatens consumers in our country.
    So I very much understand the economics of this merger and 
the reasons that it makes sense on paper, on the ground, and in 
the air. At the same time, I think that the Department of 
Justice has to be vigilant about the industry not only for the 
sake of your passengers but also other airlines where the 
threat of consolidation may be on the horizon.
    So let me begin my questions in terms of the outlook and 
interests of our passengers by asking about Connecticut's 
passengers and consumers. I would like a commitment, Mr. 
Parker, that service will be maintained at its current levels 
or increased at both Bradley and Tweed airports.
    Mr. Parker. Yes, sir. Again, that is our intention. That is 
what we would commit to do at the time of the merger. I do want 
to be cognizant in all these cases that, you know, part of the 
reason there is skepticism about the airline's ability to do 
this is that others that came before us and made commitments, 
that people feel like they were not--feel as though they were 
not kept. What I can tell you is what I have continued to say 
here, which is the value of this merger is putting these two 
airlines together, flying everywhere we fly today. So I am 
happy to commit that once we put the airlines together, we will 
continue to fly the places we continue to fly today, in 
Connecticut as well, with just one caveat: that conditions 
change, of course, and there may be something that allows us--
that requires us because of market conditions to change. But 
that is always the case. That is certainly the case in the 
stand-alone. There is nothing in this merger in any of the 
markets we serve that would lead us to discontinue service, and 
that is certainly the case in Connecticut.
    Senator Blumenthal. What you are saying, in effect, is if 
passengers or consumers decide they do not want to go to 
Washington from Bradley anymore, you will not continue to fly 
airplanes----
    Mr. Parker. Precisely--or if the cost of fuel gets so high 
it is too expensive to carry passengers that far, absolutely. 
But precisely what I----
    Senator Blumenthal. But your present expectation and your 
commitment is to continue to fly at the present levels of 
service to both Tweed and Bradley?
    Mr. Parker. Yes, sir.
    Senator Blumenthal. And one of the proposals I have seen--
and probably you have considered--is to increase the service, 
as a matter of fact, into Tweed insofar as a flight to 
Washington, DC, may be plausible or feasible. Could you comment 
on that possible route?
    Mr. Parker. I do not have that date in front of me, 
Senator, to know exactly. I would like to get back to--I will 
get back to you on that and see what indeed might make sense 
there.
    What I know is the airline does well flying to Tweed, and 
we are happy with the service we have there today. I am not 
certain about growth opportunities, but we will get back to 
you.
    Senator Blumenthal. What I would suggest is that the 
increasing economic activity in the New Haven area, 
particularly involving bioscience and biotech, may justify that 
kind of flight from Washington to Tweed, and I would appreciate 
your getting back to me about it.
    Mr. Parker. Yes, sir, we will. We would like to fly 
anywhere that we can do so profitably and enjoy the service we 
already have to Tweed. Thank you.
    Senator Blumenthal. Maybe then I can ask both of you 
whether you see yourselves as competitors on any particular 
routes. In other words, generally you have said you are not 
flying the same routes; therefore, you are not competing with 
each other. Are there any routes where you are presently 
competitors?
    Mr. Horton. Well, as Doug maybe mentioned earlier, it is a 
unique merger in that it is very complementary and there is 
very little overlap in the network. So today the combined 
company operates some 900 routes, and on only 12 of them do we 
directly overlap. So that is, I think, unique distinct from 
prior mergers in the industry.
    Senator Blumenthal. Where among those 12 routes do you see 
yourselves as really going head to head?
    Mr. Horton. Well, we are competitive on all of them, but, 
you know, airlines are a network business, as you know, so even 
where we do not have a direct overlap, of course, we are 
competing via connections over hubs. And that is why the 
industry is so dynamic and so competitive, and that is why 
fares have been, you know, so restrained over the years. There 
is just so much competitive activity in the industry.
    Senator Blumenthal. Do you agree, Mr. Parker?
    Mr. Parker. Yes, sir. We absolutely are competitors today. 
We compete vigorously against each other. But we have two route 
networks that are not--that independent are not as capable of 
competing against the larger carriers as we will be together. 
So I think by putting this together, we create a stronger 
competitor to the rest of the industry.
    Senator Blumenthal. In the past, Mr. Parker, I believe 
USAir has resisted raising fares when other airlines have done 
so, and I guess one of the concerns that we may have is that 
the merger might lessen the downward pricing pressure that that 
past conduct has created. Do you foresee a change in that 
pricing behavior or conduct?
    Mr. Parker. I do not see anything in the merger that would 
change pricing behavior at all. Indeed, all it will do is allow 
the put the prices on more markets across the United States.
    Senator Blumenthal. And, Ms. Moss, maybe I could ask you 
your perspective on fair prices as a result of consolidation. 
Do you see an impact on the prices of these two airlines 
generally, and in particular, on any particular routes?
    Ms. Moss. Thank you. I think that these two airlines are, 
in fact, head-to-head competitors. They are each other's 
closest competitors on a number of routes. In our white paper, 
we have a table that presents the results of the overlap 
analysis. So, yes, there are definitely routes that will be--
where competition will be significantly eliminated, several 
mergers to near monopolies, several mergers to monopoly, and 
antitrust analysis, you know, is very good at sort of 
predicting what the effects of eliminating head-to-head 
American are. That is sort of a direct effect. And so the 
statistics show that.
    I think the important point also is that, based on the 
Delta/Northwest analysis and United/Continental where we saw 
elimination of competition, substantial elimination of 
competition on some very important routes in the United States, 
we did see some fare increases, and some pretty significant 
ones. We also saw very few fare decreases, but in addition, we 
saw the carriers driving traffic to large hubs. And it is a 
very similar fact pattern, here and in comparison to the last 
two mergers. And I think that we really, for the good of 
aviation policy, competition policy, public policy, and 
American consumers, we have to inform what goes on in this case 
from what has happened in the past. And certainly at a route-
specific level, that is what we see. And at a national systems 
level, you know, with very few large systems, you certainly 
increase the probability that the airlines will simply follow 
each other on capacity decisions, keeping capacity tight to 
maintain fares, and as part of sort of a tacit agreement, and 
there is a lot of that already. There are quotes all over the 
press from other airlines indicating that they want capacity 
discipline to maintain fares. So there is quite a bit of 
evidence out there already and empirical economic analysis that 
shows this.
    I think, finally--I do not want to run over my time, but, 
finally, I think the broader perspective here is really, really 
important. The airlines want to compete in the global system, 
and I understand that. That is where the business is going, and 
that is where the dollars are. We are really stuck, though, we 
a very fundamental tension over expanding globally without 
sacrificing domestic consumers. And that is what is happening 
here. We are expanding globally to compete in the global arena, 
fair enough, but we have to find a way not to sacrifice U.S. 
consumers on the altar of global competition. And this all sort 
of comes out of the driving traffic to big hubs, cutting 
service to small communities. You know, not everybody travels 
internationally. I was just in Vermillion, South Dakota, where 
a bunch of little farmers came to a conference, some of whom 
had never been on an airplane before. Those are the kinds of 
consumers I think that we have to----
    Senator Blumenthal. Farmers are not so little.
    [Laughter.]
    Ms. Moss. I think we have to----
    Chairman Klobuchar. Speak for your own farmers, Senator.
    [Laughter.]
    Chairman Klobuchar. Sorry, but continue, Dr. Moss. I could 
not resist. He was making fun of farmers.
    Senator Blumenthal. I meant in importance, not in size.
    Chairman Klobuchar. All right. Okay.
    Dr. Moss.
    Ms. Moss. So I think global competition does not equal 
domestic competition, and we have to make sure that we maintain 
competition in the U.S. and for U.S. consumers. And essentially 
what I hear here are concessions and promises to maintain 
service in New York and in Connecticut and in Arizona. 
Basically what you are getting here are up-front commitments to 
condition the merger. And if that is what is going to happen, 
then we have to ask ourselves, well, then--that is sort of a 
regulatory approach to approving the merger. Why not just have 
good antitrust policy in place that looks hard at the merger 
and determines whether it is going to eliminate competition and 
harm consumers?
    Senator Blumenthal. Well, my time has expired, but I really 
appreciate that very thoughtful answer and very much appreciate 
the testimony of Mr. Parker and Mr. Horton. Thank you very 
much, Mr. McGee, as well.
    Thank you.
    Chairman Klobuchar. Thank you.
    Senator Cruz is a Member of the Judiciary Committee, but 
visiting our Subcommittee since his State has been mentioned a 
few times here. Senator Cruz.
    Senator Cruz. Well, thank you Madam Chairman, and thank you 
to each of the witnesses for being here. And if I may express 
my apologies to my friend from Arizona, and at the same time 
express to Mr. Parker that I am looking forward very much to 
welcoming you and your colleagues to be new Texans.
    Mr. Parker. Thank you very much.
    Senator Cruz. And I think you will find the State quite 
welcoming and an environment that celebrates your coming to our 
State and joining us.
    My focus for a long time has been and I think the focus of 
all of us should be on economic growth and on ensuring that the 
economic growth in our country returns to historic levels and 
remains strong going forward. And so the question that I would 
like to pose to both Mr. Horton and Mr. Parker focuses on the 
impact of this merger on growth, both from the perspective of 
the great many employees that both companies currently have, 
and then, second, from the perspective of consumers. And so I 
would like to start, Mr. Horton, by asking--obviously, 
American, headquartered in Texas, has a great many jobs in 
Texas, which we are grateful for, but American has had 
challenging financial circumstances in recent years. And I 
would like to get your views both on the negative impacts that 
would flow to American if this merger were not approved. I 
think it is widely expected to be approved, but I would like 
your views on the negative repercussions if it were not, and on 
the flip side, on the positive benefits to the many thousands 
of men and women who work at American right now if this merger 
is approved.
    Mr. Horton. Thank you, Senator, and I would also like to 
welcome my good friend Doug Parker to the great State of Texas. 
I can affirm that he does own cowboy boots. I have seen him 
wear them.
    Senator Cruz. That is the best news I have heard today.
    [Laughter.]
    Mr. Horton. I do think the merger is good for American 
Airlines in every way. American has embarked on a very 
difficult restructuring here, but it has been a very successful 
restructuring, and what has set it apart from other 
restructurings, in addition to the creditors getting full 
recovery, is that it has been about renewal and growth--it was 
built upon the largest aircraft order in the history of the 
industry--and about reinvesting in our products and services, 
and our customers have certainly taken note of that. So it has 
been about growth. And I think what is great about the USAir 
combination is it is really about extending that strategy and 
extending to--and creating a new global leader in the aviation 
industry and one that will be headquartered in Dallas-Fort 
Worth. So we are very excited about that.
    I do think the new American will be strong and vibrant, and 
I said that independent of a merger, I think we would have been 
strong and vibrant, but I think we will be that much stronger 
and that much more forceful of a global competitor combined 
with US Airways. So I think it is nothing but good for 
American, and I think it is good for the State of Texas. I 
think it is good for the Dallas-Fort Worth area.
    Senator Cruz. A followup question that I would ask of both 
of you. In my view, the surest protection of consumers is 
vigorous competition, and the question I would ask both Mr. 
Parker and Mr. Horton is: Post-merger, in your judgment, what 
would make the new American a more effective competitor and 
able to compete more vigorously with other airlines in terms of 
prices, in terms of service, in terms of ultimately providing 
consumers with a better product?
    Mr. Horton. Well, I will start. I think, you know, aviation 
is a very important industry. It is a vital industry for the 
U.S., and it is an industry where we have not in the U.S. 
been--I think it is fair to say we have not been a global 
leader because of the turmoil over the last decade. And, you 
know, the U.S. invented aviation, so I think we should have the 
very best airlines in the world.
    So that is what this is really about, is creating an 
airline that is not only the largest but can be the best in the 
world, and will have the financial capacity and the financial 
wherewithal to invest. And that is what we are going to go do.
    Mr. Parker. Thanks, and if I can, I will start actually 
with a comment on your first question to Tom, which was on the 
economic growth. I happen to believe this is one of the great 
economic growth stories in business today. We are taking two 
companies and putting them together and creating so much 
economic value that it is shared virtually everywhere. You 
know, as Tom mentioned in his opening comments, the creditors 
of American Airlines, American Airlines is going to come out of 
bankruptcy, and people are going to be paid in full. That is 
absolutely unheard of in airline bankruptcies. It is happening 
because of this merger, that those creditors are going to get 
paid back 100 cents on the dollar.
    The employees of American and US Airways are going to work 
for a stronger, more vibrant company that can pay them more and 
provide them, you know, better benefits and more security, 
which is why they are so supportive.
    And then to segue to your second question, as to consumers, 
we are creating a competitor to two other airlines, which is 
where the value comes from, is by attracting more consumers to 
our airline combined than we could independently. And because 
of that, that value is then what is shared with the creditors 
of American, the shareholders of US Airways, the employees of 
both companies.
    So, again, it is, in terms of economic growth, I think a 
very good success story, and as it relates to consumers, a 
great story as well.
    Senator Cruz. Very good.
    Thank you, Madam Chair.
    Mr. Parker. Thank you, Senator.
    Mr. Horton. Thank you, Senator.
    Chairman Klobuchar. Thank you very much, Senator Cruz.
    I have a few more questions. I promised to go back to you, 
Dr. Moss, and Mr. McGee on this ticket price issue. And, of 
course, as we all know, it is not just ticket prices; it is 
also the fees. There seems to be some disagreement. This is not 
just about USAir and American about where we are with ticket 
prices, and I do not want to put words in your mouth, Dr. Moss, 
but I think you argued that, depending on the route, depending 
on the city, that some prices have increased significantly 
depending on how much competition there is. And then also, I 
would like you to respond to Mr. Horton's point about the fact 
that fuel costs have gone up even more than the ticket prices 
have gone up in these areas and how we get a grasp on where we 
really are for the cost to the American consumer during this 
time of great consolidation. Dr. Moss.
    Ms. Moss. Yes, fare prices are probably one of the most 
controversial topics you can find when it comes to pricing.
    Certainly fuel costs are a huge part of what an airline 
incurs to do business, and fuel price volatility is a big 
factor. But airlines have become very good at hedging that risk 
and managing their fuel portfolios.
    There are other inputs costs, obviously, that factor into 
fair prices, and we are not talking about ancillary fees. Those 
are all unbundled and separate at this point and very non-
transparent as far as consumers are concerned.
    The analysis that we have done does account for fuel costs 
and does show that, above and beyond fuel cost increases, there 
are fare increases that are above average at some of these 
origin and destination airports on these large hub-to-hub 
routes.
    On a lot of these very large routes, there is very, very 
limited competition, in some cases just two carriers. After the 
merger of these guys and of United/Continental and Delta/
Southwest, some routes were monopolized. There is very little 
incentive for firms in a duopoly, where there are just two 
firms, or a monopoly----
    Chairman Klobuchar. Just for the record, you are not just 
talking about tiny towns; you are talking about major----
    Ms. Moss. Oh, no. We are talking about major hub-to-hub 
routes where there is limited, very limited competition. And if 
you eliminate a competitor in a small market, meaning very few 
competitors, the chances are you are going to get price 
increases. And we have seen that. Our analysis has shown that.
    So the fact pattern is there, and there are a lot of 
similarities, and I think those similarities really need to be 
duly noted and investigated by the DOJ when they look into this 
merger.
    Chairman Klobuchar. Thank you.
    Mr. McGee.
    Mr. McGee. Yes, thank you Senator. I think in many ways 
what we really have is two different domestic industries, 
because you have to look at routes on whether or not they are 
served by low-fare carriers. As 20 years ago the Department of 
Transportation pointed out with a famous report on this--``The 
Southwest Effect,'' as it was dubbed. In reference to what 
Senator Blumenthal was speaking about earlier, I am a resident 
of Connecticut as well, and Connecticut sort of crystallizes 
this issue, because on routes where there is low-fare 
competition with Southwest, there is pressure to keep fares 
down. On routes where major network carriers compete head to 
head without low-fare competition across the country, what we 
see is that, in fact, prices have increased, and they continue 
to increase. And this is borne out every quarter by the 
Department of Transportation quarterly airfare reports.
    And so, you know, added to that there is increasing 
evidence that Southwest itself, which is, you know, often 
pointed out as the low-cost leader, and fairly so, that 
Southwest's fares have increased as well over time.
    There has been a lot of discussion about, you know, over 
time fares going down, and, you know, there is evidence for 
that, there certainly is. What has not been discussed are the 
fuel surcharges, and, of course, as you point out, the 
ancillary fees on top of that. So we are very much comparing 
apples and oranges in many cases.
    But you really have to dig down to look route by route 
almost to see where consumers are benefiting, and, again, where 
there is no low-fare competition, consumers do not benefit.
    Chairman Klobuchar. Okay. Any response?
    Mr. Parker. We welcome the analysis. We understand, as we 
said at the beginning, that the scrutiny of this is important, 
and we welcome it, and we believe that the result of that 
analysis will be a recognition of what we described here, which 
is that this is a merger that is good for competition, that 
should be approved, and that is good for the United States.
    I would also just mention, as it relates to our customers, 
what we are trying to do here is provide more to our customers. 
We do not have the ability to connect people or to get people 
to as many places as some of our larger competitors. By 
combining we do. We cannot be in business if we do not provide 
good service to our customers, and this will allow us to 
provide better service to customers than either of us can 
independently.
    Chairman Klobuchar. Okay. I wanted to followup a little bit 
on that as you were talking about the nine routes and that 
there is not significant overlap between the airlines, but one 
of the things that we looked at is how you do compete right 
now, and that would be how US Airways and American compete, and 
I will just give you one example. A lot of the general public 
who may not get businesses playing for their flights, they look 
for lower-cost flights by going through hubs because they found 
out that if they maybe make a stop somewhere, they get a 
cheaper rate. And so an example, USAir charged $549 for 
connecting service between Dallas and Washington National, 
which is far less than the $1,500 for American's nonstop 
service, just an average we saw right now. It is nearly $1,000 
cheaper.
    So do you believe there still will be these kinds of 
competitive rates when you see this merger where regular people 
choose to take some kind of ridiculous route sometimes or go 
through a hub instead of going direct just to save money? How 
is that going to affect that part of the competitive market in 
the merger?
    Mr. Horton. Well, certainly direct routing is of more value 
to a customer than one where you have to stop at a hub, so it 
stands to reason that it would be priced differently. But I 
think there are--there will be any number of connecting 
opportunities to compete against any nonstop flight. So you 
take an example like that, and somebody could also connect over 
Atlanta on Delta or Chicago on United. There are just other 
ways to do it, and there are literally thousands of those 
competing alternatives in the marketplace, which is why, you 
know, fares in the industry have not grown as fast as 
inflation. It is just a very, very competitive marketplace.
    Chairman Klobuchar. A response from Dr. Moss or Mr. McGee.
    Ms. Moss. Yes, I think you have to be careful when you sort 
out nonstop service, which is typically a distinct market, for 
connecting service. There are different ways to get places, but 
I think to pull in something that Bill said earlier, we really 
cannot underemphasize the critical role of the low-cost carrier 
here. Low-cost carriers in the past have provided a really 
important source of discipline, and that includes, you know, on 
nonstop routes and also connecting routes. I mean, a lot of 
people will take connecting routes on a low-cost carrier to get 
from Point A to Point B. Others will fly a legacy airline to 
get from Point A to Point B. It depends on you as a consumer.
    But low-cost carriers in an environment where there is 
increasing legacy consolidation are really going to have a 
tough time providing that discipline. You know, they are going 
to behave less like little mavericks, like AirTran and Jet Blue 
and others in the industry in the past, and they are going to 
face this critical decision about whether to continue to be 
aggressive and take share from the legacies or whether to just 
follow what the legacies are doing in terms of their pricing 
policies. And that is really the critical juncture I think that 
we are at, and that is what we risk losing by increasing the 
solidification of most of the market with the legacies and 
leaving the low-cost carriers with less than 10 percent of the 
national market. I do not think we can rely on them to sort of 
save us all from higher prices.
    Chairman Klobuchar. And I think that the numbers are now 
that the Big Four would each have about 20 percent market 
share, including Southwest in that, and then the next largest 
would be Jet Blue with 5 percent, Alaska with 3.9 percent, and 
the remaining airlines with less than 2 percent. Is that right?
    Ms. Moss. I think that--yes, that is----
    Chairman Klobuchar. And that is one of the reasons that 
Senator Lee and I are asking for the GAO to do a study of the 
entire industry beyond just this merger in terms of the effect 
all of this consolidation is having on pricing, is having on 
competition and service to consumers, which I hope will be 
helpful.
    Just two more followups, and then I will turn it over to 
Senator Lee. First of all, the integration if the merger were 
to occur. I know that, Mr. Parker, US Airways had a long 
transition in merging with America West, and there were some 
glitches. We will not go into all of it right now, but if the 
merger is approved, what are you going to do to ensure that 
these problems do not occur again for consumers?
    Mr. Parker. Well, putting together two airlines we 
recognize is not an easy task, but the good news is both of us 
have done it once before and have learned a lot through that. 
More importantly, the fact that we have agreement with all of 
our employees, our labor unions, on how they will integrate 
makes this dramatically easier. It is one of the more difficult 
parts of integration, which, thanks to hard work on their part 
and working with us, we already have largely resolved. So that 
will help tremendously.
    But then as it relates--so now you are left really with 
kind of systems integration, which certainly is difficult as 
well. But like I say, we have learned a lot through our 
experience at America West/US Airways, and I will let Tom speak 
for himself, but I know that they at American have done the 
same. We have a great team we are going to put together between 
the two airlines, and it is our primary focus going forward 
making sure that we integrate in a way that is done efficiently 
and without disruption.
    Chairman Klobuchar. Mr. Horton.
    Mr. Horton. Well, we have learned a lot not only from our 
own experience but also from what we have seen with Delta/
Northwest, United/Continental, and Southwest/AirTran. And so we 
will seek to take the best of those practices and put them in 
place as we pursue the integration.
    We already have integration planning underway. Doug and I 
lead up a transition team, and so we are working hard to make 
sure that when the deal is closed later this year, we can hit 
the ground running. And our focus is 100 percent on getting 
this right for our customers.
    Chairman Klobuchar. Thank you.
    To end on a positive note here for everyone, tomorrow we 
are holding a hearing in the Commerce Committee about airline 
safety, and since the last FAA reauthorization, the airlines 
have been participating with the FAA, as you know, and 
Secretary LaHood on improving safety. I would like to say that 
I just saw that 2012 was the best in safety history, according 
to the International Air Transport Association. And we always 
know anything can happen. As I was sitting on my USAir flight 
yesterday in a bad storm to a bad storm, everything went well. 
But we all think of that every time we get on a plane. And just 
to end with how you see these mergers as affecting airline 
safety.
    Mr. Parker. Well, first, thank you for the comments. We are 
extremely proud of our people and what they have accomplished 
over time. It is by far the most safe form of travel and will 
continue to be so. This merger, of course, will have all the 
benefits that I stated, but first and foremost, we will be 
ensuring safety. We will work closely with the FAA to move to 
one operating certificate. We will take our time and make sure 
we do that well. The FAA will ensure we do as well. We work 
extremely well with the regulator because we share a view on 
how critically important it is for the safety of our customers 
and consumers. So we will work through that. It will take 
something on the order of a year and a half actually before we 
get to one certificate because it is so important and most 
consumers will not see that. You will see more of one airline 
flying. But it will be two separate airlines until we are all 
certain and the FAA is certain that we have our procedures and 
policies coordinated well enough that we can move to one FAA 
operating certificate.
    Chairman Klobuchar. Thank you.
    Mr. Horton.
    Mr. Horton. Yes, I would just second Doug's comments. We 
are very proud of our safety record. It is our highest calling 
in the airline business, and we are very proud of our people 
who deliver that every day.
    Chairman Klobuchar. Okay. Anything more, before I turn it 
over to Senator Lee, on any of my questions I had of the 
airline executives? Dr. Moss, Mr. McGee.
    Ms. Moss. I just have one quick point on efficiencies, and 
I think it is the system integration stuff that really has been 
the skeleton in the closet for previous mergers. We have seen 
in United/Continental, in Delta/Northwest, and the America 
West/USAir merger. You know, when DOJ looks at efficiencies, 
they want to see stuff on the table. They want to see merger-
specific efficiencies, and they want to see that they are 
cognizable, meaning that they are really going to be realized. 
And a lot of these system integration problems kind of pop out 
of the bushes after the merger has been consummated, and we 
have now seen enough of this and have enough of a track record 
to be able to say, okay, that is probably something we should 
be expecting to happen. And I think it is important then to 
balance or account for those very probable system integration 
problems at the time the merger is reviewed, because they cut 
significantly into the efficiencies that are promised by the 
airlines. And if they cut significantly into them and those 
costs are passed on to consumers, then the efficiencies are not 
as great as they were originally forecasted to be.
    So I think this is something new that we are going to have 
to--or, you know, that antitrust analysis should be accounting 
for.
    Chairman Klobuchar. Thank you very much.
    Mr. McGee.
    Mr. McGee. Yes, thank you. One other thing that we wanted 
to point out is we are concerned at Consumers Union not just 
about the micro effects of this specific merger, which we have 
detailed today, but also the macro effects. Even on the pricing 
issue as we talked about, you know, the fact is when you have 
three network carriers as opposed to six or seven or eight, you 
know, we have seen in the past with fare increases, for 
example, that one or two airlines would match a fare increase 
and others would not, and the fare increase would be rescinded. 
We have seen it with new innovations.
    So the effects of this merger would have been very 
different 7 or 8 years ago had we not had all of these other 
mergers. And so we just do not want that to be lost in all of 
this.
    You know, the argument has been made, well, you did it for 
the others, why not do it for us? But with each successive 
merger and with this rapid consolidation of the industry, the 
industry continues to change and, in our view, it just raises a 
lot of disturbing questions for consumers.
    Chairman Klobuchar. Thank you very much to all of you.
    Senator Lee.
    Senator Lee. Thank you.
    Dr. Moss, first of all, I would like to commend you on your 
opening statement being exactly 5 minutes, no more.
    [Laughter.]
    Chairman Klobuchar. He actually turned to me during it and 
said that is amazing.
    Senator Lee. A military-like precision there.
    So in conducting antitrust analysis, our Subcommittee often 
looks to whether and to what extent there may be barriers to 
entry in a particular marketplace, barriers that might prevent 
a competitor from coming into the marketplace and providing 
some market discipline.
    When the barriers to entry are minimal, then new 
competitors or existing rivals find it, you know, relatively 
easy to get into the market, and they have more of an ability 
to emerge and to compensate for any concentration of market 
power. On the other hand, where there are significant barriers 
to entry, that becomes less possible.
    So what do you see as the greatest barriers to entry into 
the airline industry?
    Ms. Moss. That is a really good question, and entry can be 
a very powerful thing, just like efficiencies can be. You know, 
if mergers create anticompetitive effects and potential harm, 
then the first thing we look to, obviously, is, well, will 
entry discipline price increases post-merger? And will 
efficiencies, for example, have countervailing effects to the 
adverse effects of higher prices, reduced service, lack of 
choice, et cetera, et cetera.
    I think the biggest barrier to entry, as this industry 
further consolidates, is concentration itself, concentration 
meaning, you know, just a couple of airlines dominating large 
hubs. It really is a big wall to scale for a small potential 
entrant to get into a market where they are going to have to 
scrabble and scrape to get slots, to get gates, to get 
ticketing space, baggage handling, all this kind of stuff--all 
the pieces of the puzzle that need to be in place for an 
airline to offer service.
    I think as concentration increases at hubs, it becomes less 
inviting, less easier for smaller carriers to get in. And that 
is exactly what we have seen. We used to have hubs that really 
were very friendly and conducive to multiple airlines serving 
them. And as consolidation has occurred, those hubs have shut 
down and--not shut down in a literal sense, but shut out 
potential competitors.
    Now, with that said, airlines are in the unique position of 
having very fungible assets where they can move aircraft around 
and go to profit centers, go to markets that are very lucrative 
and very profitable. That is what you want to see. You would 
ideally like to see that in the wake of a merger that creates 
price increases. The question is: Is that harder to do today 
than it was 6 years ago before six mergers went through? 
Probably yes. And that we need to, I think, look very carefully 
at.
    And as the fringe of competitors shrinks down with the low-
cost carriers and the regionals, they are really facing much, 
much higher barriers to entry, which could potentially help 
consumers.
    Senator Lee. Okay. So the barriers to entry that you would 
see that might be attributable to this merger, should it go 
through, are you saying that would be felt most acutely in 
these hubs?
    Ms. Moss. I think if the hubs become more consolidated--and 
we have shown that to be the case in many major airports--then, 
yes, I think it will be harder.
    Senator Lee. Any other barriers to entry that you can point 
to that would flow naturally from this merger if it were to 
proceed?
    Ms. Moss. Well, I think that is the major one. And that is 
at sort of the route-specific level. If you look nationally, I 
think you are also looking at potential barriers to entry, 
because low-cost carriers do not really operate as large 
national footprint-type systems, and it will be difficult for 
them to expand their operations to try and horn in on that 
market, to try and get a foothold in that market to compete on 
a broader level.
    Senator Lee. I understand that you have testified in the 
past with regard to a number of other mergers in the airline 
industry, and you have recommended against them and, 
nonetheless, the Department of Justice, under Republican 
administrations and Democratic administrations, has approved 
those that you have testified against. Is it your opinion that 
the Department got it wrong in those cases?
    Ms. Moss. I do not want to say that the Department of 
Justice got it wrong. I think the DOJ does very, very good, 
solid, exhaustive analysis in these airline merger cases.
    I think what has happened is perhaps beyond the ability of 
antitrust to sort of address on a really comprehensive basis. 
We have had a series of mergers that have sort of put this ball 
into motion to allow the carriers to compete globally, which we 
discussed just a few minutes ago, and that is fine. I mean, 
again, those are lucrative markets, and they want to compete 
and expand globally.
    The question is: What does that do for the domestic 
markets? And we do see some very negative tradeoff effects 
between expanding globally and serving American consumers in 
the form of more competition.
    I am not sure that the Department of Justice has the 
ability to even, you know, take that larger view of how 
consolidation is changing sort of a moving target in the 
industry. It is a bigger sort of policy issue, aviation policy 
issue, I think that we need to keep our eye on very carefully.
    Senator Lee. Okay. Thank you.
    Let me shift to Mr. McGee. That leads into my next question 
for you. The Department of Justice has in the past focused much 
of its attention on the routes, on what a particular merger 
might do to routes, the concern being that if an airline 
through consolidation is able to achieve dominance over a 
flight between City A and City B, that there will be too much 
market concentration, they will be able to dominate the price, 
increase prices there, and competition will not be able to step 
in and effectively keep prices under control and thereby 
protect consumer welfare.
    In the case of this merger, as I understand it, of 
approximately 900 routes that would be covered by the combined 
airline, only about a dozen or so overlap between the two 
partners in this proposed merger. So does that suggest that at 
least that part of the antitrust analysis suggests that this is 
mostly okay?
    Mr. McGee. No, I think, you know, Consumers Union has some 
concerns about the analysis being a little narrow in that 
sense. Certainly it is important to look at head-to-head, 
nonstop competition, and that is certainly probably the first 
thing you would look at. But, you know, as Mr. Horton pointed 
out----
    Senator Lee. But that aspect of it you would concede is not 
a red flag, I mean, 900 routes, 12 overlap?
    Mr. McGee. Relatively. I mean, obviously, if you live in 
those cities or you do business in those cities, it is 
certainly a big concern. But I was going to say, as Mr. Horton 
pointed out earlier, we are talking about network carriers 
here. So, you know, you can basically pick any two points on 
the domestic map and say that, you know, these two carriers 
have a fair shot at competing over their hubs because of, you 
know, the geographic penetration.
    So, in other words, in order to get, you know, from 
Savannah to, you know, Milwaukee, you may choose to do it 
through Charlotte, or you may choose to do it through, you 
know, Atlanta with Delta, or you may--I am not even sure if, 
you know, American would serve that through Miami. But, 
clearly, you know, there are a whole plethora of options.
    So when you are looking at network carriers, you really are 
looking at a much, much bigger scope, and I guess the question 
is, you know, how closely is the DOJ looking at that?
    Senator Lee. Okay. Thank you.
    We have talked a lot today about consumer welfare, and we 
have acknowledged the fact that the best way to protect 
consumer welfare is through robust competition, making sure 
that within the marketplace and within the market that we are 
examining that there is effective, strong competition. You 
know, in response to questions about competition, proponents of 
the merger have suggested that this transaction, if approved, 
if it proceeds, will have important pro-competitive effects.
    I would like to just sort of close by giving Mr. Horton and 
Mr. Parker a chance to respond to some of the statements that 
have been made on the other side of this and sum up by 
providing in brief form what you think are the benefits to 
competition and consequently to consumer welfare that could be 
achieved through this merger.
    Mr. Horton. Well, maybe I will start. I think a strong U.S. 
airline industry is important to the U.S. economy and is 
important to all Americans. And I do think that consolidation 
has been part of creating a healthier U.S. industry more able 
to invest on behalf of our customers. You certainly see that at 
American. I think you will see it at the new American.
    It is about choice. You know, this merger will create more 
choice for customers, more ability to fly to more places, to 
connect more dots on the map and create a third, truly global 
competitor to the big U.S. airlines we compete with, but also 
the global airlines that we compete with. This is a globally 
competitive industry now.
    So I think it is about creating more choice, more 
opportunities for customers, and we think that is good for 
American, we think it is good for US Airways, we think it is 
good for America.
    Senator Lee. Mr. Parker.
    Mr. Parker. Well, that was well said by Tom. I would just 
like to also follow on thanking you for your comments about the 
importance of our business. Some do not understand how 
important the airline business is to the U.S. economy. As you 
noted, one in eight jobs is in some way tied to the airline 
business. It is a vitally important business that needs the 
ability to compete, and we need to have strong and vibrant 
competitors. Either of our airlines could compete 
independently. No one is here suggesting that we could not. 
What we are saying is we can compete better together. We can 
provide better competition, we can provide better service to 
consumers once merged. And I think that is good, as Tom noted, 
for the country, for consumers, and that is why we are here.
    I do want to come back a little bit, if I can, to the 
question that you asked Dr. Moss about barriers to entry. The 
reality is there are no barriers to entry in this business. 
Because we have worked so hard to modernize our fleets at the 
larger airlines, there is a large amount--there are large and 
inexpensive aircraft for any entrepreneur that wants to go buy 
a fleet of airplanes cheaply, the airplanes are out there. If 
you just go ask your favorite entrepreneur why they do not go 
do that, you know, they will not tell you, ``Oh, because I 
cannot find airplanes.'' They will not tell you, ``Oh, because 
I cannot fly the routes I want to fly.'' They will tell you, 
``Because I cannot make any money doing it.'' It is too 
intensely competitive, and you cannot cover your costs of 
capital by starting up a new airline, not because of barriers 
to entry but because it is so competitive you cannot make any 
money.
    Senator Lee. I assume some would add to that, though, the 
regulatory burden is so----
    Mr. Parker. That is part of it. It is expense as well, yes, 
sir. It is expenses----
    Senator Lee. Lawyers are not cheap, as it turns out.
    [Laughter.]
    Mr. Parker. Yes. But, no, honestly I would encourage you to 
go ask any entrepreneur why it is, and that is what you will 
hear. You will hear that it is expensive, it is highly 
regulated. But mostly they will tell you, ``Why would I want to 
invest now in that business? It is too competitive.''
    So, anyway, with that said, I will just come back to where 
Tom ended up, which is we think this is great for--we know it 
is great for our two airlines, for the employees of both 
airlines, and we know it is great for consumers, because we are 
going to create a stronger airline that provides customers more 
choice.
    Senator Lee. Okay. Thank you.
    Thank you, Madam Chairman.
    Chairman Klobuchar. Thank you, Senator Lee.
    Thank you to all our witnesses. This concludes the hearing. 
I wanted to thank my staff, Caroline Holland, who previously 
worked with Senator Kohl, who is our staff director; Craig 
Helcott, my counsel; and also Maria Lavadeer for their work on 
this. And I know Senator Lee has staff working diligently on 
this as well. I want to thank them for their work. And I want 
to thank the witnesses for appearing today. You have provided 
meaningful insight into this merger and the challenges that are 
faced by the companies in an ever-competitive international 
market, but also as has been pointed out, the challenges that 
are faced by consumers as we try to look at these things not 
only in terms of the airlines' ability to compete in a global 
market and the reason that would create incentives for merging, 
but also what is going to happen then to people not just in the 
smaller markets but also actually in some major metropolitan 
markets and to make sure that they get the service they need, 
that fares are kept at an affordable level, and that our 
airline industry, which is, as we have pointed out, so 
important to our country that it benefits everyone in this 
country.
    So that was one of the reasons we wanted to see this GAO 
study because we think it will be important to look at it not 
just in the context, as Dr. Moss pointed out, in one merger, 
but also in the context of the entire industry.
    I want to thank everyone for attending. As I said, the 
record will remain open for a week for any remaining 
submissions or testimony. Thank you very much. The hearing is 
adjourned.
    [Whereupon, at 12:07 p.m., the Subcommittee was adjourned.]
    [Additional material submitted for the record follows.]

                            A P P E N D I X

              Additional Material Submitted for the Record
              
              
              
 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
             
              
              
 

                 Additional Submissions for the Record

A list of material and links can be found below for Submissions for the 
 Record not printed due to voluminous nature, previously printed by an 
 agency of the Federal Government, or other criteria determined by the 
                               Committee:

    Ferriss, Bruce, and Barbara Ferriss, Spokespersons, Association of 
Professional

     Flight Attendants (APFA), and Former TWA Flight Attendants, 
attachments:
        http://twajustice.com/senate_exhibits.html

    Mitchell, Kevin, Chairman, Business Travel Coalition, statement:
        http://judiciary.house.gov/hearings/113th/02262013_2/
        Mitchell%2002262013.pdf

    Moss, Diana L., Ph.D., Director and Vice President, American 
Antitrust 

     Institute (AAI), additional submission:
        http://www.antitrustinstitute.org/antitrust/sites/default/
        files/
        AAI_BTC_USAir-AA_White%20Paper_8-7.pdf

                                 [all]