Aviation Competition: Issues Related to the Proposed United Airlines-US
Airways Merger (Letter Report, 12/15/2000, GAO/GAO-01-212).

In May 2000, two of the nation's largest airlines, United Airlines and
US Airways, proposed to merge. As part of the overall agreement, United
and US Airways also proposed to divest some of US Airways' assets at
Ronald Reagan Washington National Airport to create an airline to be
known as DC Air. The Department of Justice is currently reviewing the
proposal to determine if the merger would violate U.S. antitrust laws
and, if so, whether the proposed divestiture constitutes an adequate
remedy. GAO reviewed the proposed merger and found that it would create
an airline so large that it would spur further industry consolidation.
The new airline would have over 25 percent of the total U.S. market and
would take in almost $9 billion more than the next largest airline. And
while the proposed merger may benefit consumers by increasing
competition in some areas, it could also eliminate competition in other
areas and reduce consumer choice. DC Air would face significant
competitive challenges from other airlines. DC Air would offer smaller
aircraft and less frequent service but would seek to compete with other
airlines by reducing its fares.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GAO-01-212
     TITLE:  Aviation Competition: Issues Related to the Proposed
	     United Airlines-US Airways Merger
      DATE:  12/15/2000
   SUBJECT:  Commercial aviation
	     Competition
	     Corporate mergers
	     Airline industry
	     Antitrust law
	     Airline regulation
	     Restrictive trade practices
IDENTIFIER:  Ronald Reagan Washington National Airport (DC)