[Congressional Record Volume 147, Number 21 (Wednesday, February 14, 2001)]
[Senate]
[Pages S1371-S1372]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            AIRLINE SERVICE

  Mr. DORGAN. Madam President, I rise to speak for a moment about the 
airlines and the airline service in our country. Last weekend, the 
National Mediation Board released Northwest Airlines and one of its 
unions, called AMFA, from the mediation service that was going on.
  Now we are under a 30-day march to a potential labor strike and 
therefore shutdown of airline service. It is not just Northwest 
Airlines. We have a United Airlines dispute in front of the National 
Mediation Board. We have a Delta Airlines dispute there, and an 
American Airlines dispute.
  What has happened in recent years with the airlines, not just with 
respect to these labor issues, but with respect to the way the airlines 
have remade themselves since deregulation, is very troubling to me and 
should be very troubling to most of the traveling public in this 
country.
  I mentioned earlier, today is Valentine's Day. I suggest for a moment 
that you might want to take a trip on Valentine's Day. If you want to 
go to Bismarck, ND--and if you say no because it is February, I would 
admonish you that Bismarck, ND, is a wonderful place and it is not all 
that cold in the winter--guess what the walk-up cost for a flight to 
Bismarck, ND, is--$1,687. But assume your sweetheart is very special 
and you decide, I am not going to go Bismarck. I am going to Paris, 
France. Do you know the fare you can find to Paris, France today? It is 
not $1,687. We have found walk-up fares to Paris, France, for $406; or 
Los Angeles, $510. So fly to Bismarck for $1,687 or Paris, France, for 
$406.
  Ask yourself, what kind of a nutty scheme is this that these private 
companies have developed a pricing scheme that says: If you fly twice 
as far, we will charge you half as much. But if you fly half as far, we 
will charge you twice as much.
  Using Bismarck again, if you have a hankering to see the largest cow 
on a hill overlooking New Salem, ND--the cow's name is Salem Sue, the 
world's largest cow--or to go to see Mickey Mouse at Disneyland in Los 
Angeles, you pay twice as much to go half as far to see the largest 
cow, or pay half as much to go twice as far to see Mickey Mouse. What 
kind of a nutty idea is that? Who on earth comes up with these pricing 
schemes? Deregulation comes up with pricing schemes that say, by the 
way, we are not going to regulate the airlines. They can compete 
aggressively between the big cities where a lot of people want to 
travel. That competition will drive down prices, and you have really 
nice prices among the large cities where people are traveling. 
Meanwhile, the rest of the folks get soaked with extraordinarily high 
prices and less service.

  So what happened after deregulation is these major airlines decided 
they really liked each other a lot and started romancing each other and 
they merged. What used to be 11 airlines is now 7. They want to merge 
some more and they want to go from 7 to 3 airlines.
  What happened through all these mergers? They retreated into the 
regional hubs, such as Minneapolis, Denver, Atlanta--you name it; they 
have retreated to regional hubs where one airline will control 50 
percent, 70 percent, 80 percent of the hub traffic. The result is that 
a dominant airline controlling the hub traffic sets its own prices, and 
those prices are outrageous.
  Now, here is the point: We now have outrageous prices for people in 
sparsely populated areas in the country. We have a system of 
deregulation in which the airlines have become unregulated monopolies 
in regional hubs, and now we have a circumstance where United decided 
it wants to buy USAir, and American wants to buy TWA because TWA is 
going to be in bankruptcy, and it has been there twice. Delta is 
talking about buying Continental, and Northwest will soon be involved 
in the mix. They want to condense this down to three big airline 
carriers. Now, that is not competition where I come from. That is kind 
of an economic cholesterol that clogs the economic veins of the free 
market system in this country. We need to stop that.
  I am considering legislation that would set up a moratorium on 
airline mergers above a certain size for a couple years so we can take 
a breath and understand what this means to the American consumers. The 
answer of what it means to the American consumers is quite clear to me. 
Some are rewarded with lower fares--if you are in the large markets 
where there is competition, while others are paying extraordinary 
prices to fly in small markets where there is less service and higher 
prices.
  United says it wants to buy USAir. That combination means a bigger 
company with more market control. American says TWA is failing and it 
wants to buy TWA. More market control. The TWA thing--if I might just 
describe the circumstance--is, in my judgment, byzantine. It was 
purchased by Carl Icahn in a hostile takeover in the 1980s. I said this 
is unhealthy to put an airline company into these hostile takeover 
wars, with junk bonds and everything. Guess what the problem with TWA 
is? At the moment, Mr. Icahn, after having been through two 
bankruptcies with TWA, has an agreement post bankruptcy to sell seats 
on TWA at a 45-percent discount from the lowest public fare. This 
Icahn-TWA deal, termed the ``caribou agreement,'' remains in effect 
through 2003. Mr. Icahn is vigorously contesting the bankruptcy 
proceeding because if the assets are sold, the company will cease to 
exist.
  What kind of a deal is that when airlines become pawns in hostile 
takeovers and then you get sweetheart deals coming out of bankruptcy 
that impose that kind of burden on the back of TWA?

  It doesn't look to me as though the public interest has been defined 
at all in these machinations. The point is, when airlines have become 
bigger and bigger and have retreated into dominant hubs, if there is a 
strike or lockout and the airline ceases operating, it is not like it 
was 30 years ago when, if your airline shut down, you had other 
airlines. In North Dakota, we had five different companies flying jet 
airplanes into our State. Now we have one, and we just got a second 
recently with a regional jet.
  The point is, when an airline shuts down now, when you have dominance 
in a certain hub, entire parts of the country will be left with no 
airline service at all. Those airlines and their

[[Page S1372]]

employees have dramatically changed the circumstances of collective 
bargaining. There is someone else who must be at their table, and that 
is the American traveling public because their interests are at stake. 
A strike or lockout will affect their interests in a very dramatic way.
  I wanted to make this point for a couple reasons. One, I think these 
proposed mergers fly directly in the face of public interest and ought 
not to be allowed. That is No. 1. We ought to stop this. We don't need 
to go to three airlines. That is, in my judgment, moving in the wrong 
direction. That is not in the public interest. We need more 
competition, not more concentration.
  No. 2, and my final point, is when you have the kind of disputes that 
now exist before the National Mediation Board and the threatened 
disruptions of airline service, it will be devastating to the public 
and to this country's economy if you have entire regions with no air 
service at all. We went through a strike with the dominant carrier in 
our region about 2 and a half years ago and it was devastating. We 
can't let that happen again. There are four carriers with cases in 
front of the mediation board, one of which was just released. I say to 
those carriers and to the labor unions, because you have remade 
yourself in a different circumstance, with dominance in hubs all across 
this country, you have a different responsibility than you used to have 
in collective bargaining. You have a responsibility to the American 
public that didn't previously exist. This is not business as usual. 
There is another interest that must be seated at your table, and that 
is the public interest.
  Understand that those of us in Congress, those who are strong 
supporters of businesses and strong supporters of unions, understand it 
is most important that we are supporters of the public interest, the 
people we represent, and supporters of the larger national interests in 
this country.
  With what happened to the airline industry, the massive concentration 
and the critical dominance in regional hubs, these labor disputes are 
very troubling to me and to many others. They must not--I repeat--
result in the shutdown of critically needed airline service to parts of 
this country that can ill afford to have that happen.
  I say to the airlines and to the unions: Sit at that table and 
bargain. I am a big supporter of collective bargaining. Bargain and 
reach an agreement. Understand that the empty chair next to your 
discussion is a chair that represents the public interest, and that 
chair is not filled by someone who is sitting there as part of that 
discussion, but they are in that room overlooking those negotiations. 
Resolve these issues and keep that service from the company and its 
employees provided to the American people.
  I hope my colleagues will join me in expressing loudly that having 
this country go to three major airline carriers is a step backward, not 
forward. It is a step toward concentration, not competition. It plugs 
the arteries of the free market system in a very unhealthy way for this 
country.
  I will speak at a future time about concentration, and not just in 
the airline industry. I am concerned about what is happening in a range 
of industries in this country where there is concentration and 
antitrust behavior that ought to be troubling to the American people 
and this Congress.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Burns). The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Ms. COLLINS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. COLLINS. Mr. President, I ask unanimous consent that I be 
permitted to proceed for 12 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Maine is recognized.
  (The remarks of Ms. Collins pertaining to the introduction of S. 326 
are located in today's Record under ``Statements on Introduced Bills 
and Joint Resolutions.'')
  The PRESIDING OFFICER. The Senator from Nevada.

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