Our hearing today will examine the latest salvo in the recent wave of airline mergers, the merger between United and Continental Airlines. This merger will combine the two airlines that rank number four and six in terms of domestic revenue into one of the world's largest airlines. The two airlines' CEOs claim that the deal was "built to pass" antitrust scrutiny because the two airlines' routes do not overlap substantially and the low cost carriers will constrain their ability to raise prices. However, fundamentally, this merger will reduce the number of national networked airlines. Two years ago, we had six, after this merger we'll have four. So we need to ask the question – at what point do we reach a tipping point for competition?            

At the outset, I should stress that we consider this merger with an open mind, and do not reflexively oppose or support this merger. We are very mindful of the difficulties faced by the airline industry. In the last decade, the airline industry has faced unprecedented challenges - from the devastating tragedy of 9-11 and crippling increases in fuel prices to bankruptcies and a drop in travel due to the economic downturn. We all have an interest in seeing a profitable airline industry so that hundreds of communities all across America can continue to see frequent and reliable air service so essential to economic growth.            

At the same time, we must recognize the problems also faced by air travelers today. Consumers are understandably frustrated by crowded flights, disappearing leg room, frequent delays and puzzling prices. Once free services that passengers took for granted – like checked bags, telephone reservations, and even blankets and pillows – today are available only for a fee on most carriers. Is this decline in service an inevitable consequence of the industry's need for profitability? 
           

So we must ask the critical questions -- how will the loss of competition between these two national systems impact airfares and service? Will a combined United/Continental be a stronger competitor to the previously merged Delta/Northwest or will the large, networked airlines that remain dominate the airline industry across the country and internationally? Will the low cost carriers be able to step in and fill the competitive void or will they feel less competitive pressure to keep fares low or compete by offering things like free checked bags? And how will small and medium sized cities fare after this merger, at the very time that they most need frequent and inexpensive air service for their economic health?            

In closing, we recognize that both of you, Mr. Tilton and Mr. Smisek have a special duty to your shareholders to create the most viable and robust airline possible. This is the foundation of our free market economy. But we on this Subcommittee have a responsibility to the public – to protect consumers and to ensure that travelers are protected by true competition among airlines. We need to be sure that the announcement that we've all heard flight attendants say at the end of a flight – "we know that you have a choice among airlines" does not become as obsolete as airlines like Northwest, TWA, Pan Am, America West, and now perhaps, Continental.   

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