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"Possible merger of Delta, US Airways worries Utah legislators"

Thursday, December 14, 2006

Possible merger of Delta, US Airways worries Utah legislators
By Brice Wallace
The Deseret (UT) Morning News 

Utah's legislative leadership is weighing in on the possible merger of Delta
Air Lines with US Airways, calling for the U.S. Department of Justice to
review the possible economic impacts.

A Dec. 4 letter from four legislators to U.S. Attorney General Alberto
Gonzales urges a Justice Department review of the potential impacts of the
merger on all U.S. markets "and the important competitive and economic
consequences to the communities where these airlines serve."

The merger "raises potential risks that could harm not only Utah's airline
industry but also the economy of the West as a whole," their letter states.
Utah could suffer if Salt Lake's Delta hub status is lost or diminished, and
Utahns could see fewer flights, higher air fares, fewer nonstop routes,
fewer airline choices and other potential problems, it said.

"The reason we're so concerned is that Delta is the hub. It is an economic
vitality for Utah," Senate President John Valentine, R-Orem, said Wednesday
during a news conference about the letter. "With US Airways having two other
hubs - in Phoenix, 500 miles away, and Las Vegas - it just makes it so that
we know that we're going to have an economic impact if we have a
consolidation in this area with a new player in this market."

House Speaker Greg Curtis, R-Sandy, said the Salt Lake hub is important to
Utahns wanting nonstop travel to the rest of the country and for outsiders
trying to get to Utah.

"The value of having a hub in Salt Lake City cannot be overstated," Curtis

US Airways announced in November its intention to execute a hostile takeover
of bankrupt Delta, but Delta executives have said they intend to remain
independent. Since announcing its bid, US Airways representatives have said
the Salt Lake hub is safe, as it would serve cities different from those
served by Phoenix.

But Valentine said Wednesday that it seems "too risky to assume that a major
airline is going to have three hubs in the close proximity of Las Vegas,
Salt Lake City and Phoenix. You cannot economically operate three hubs in
that area."

He also said he fears a "more lopsided market if we have a major player come
in and take over this along with the other hub operations that are in the
West. That consolidation is going to make it so that we have higher fares in

"Delta has been very good for the state of Utah, and the state of Utah has
been very good to Delta," said Senate Minority Leader Mike Dmitrich,
D-Price. "It's been a good marriage. I think anything that would disrupt
this hub in the state of Utah would be very detrimental to all of the
citizens of Utah and to the people who travel to and from Salt Lake."

Curtis said Utah's legislative leaders are not calling for statutory
changes. "Those laws - those antitrust, anti-competitive laws - have been on
the books for a long time, and there's legitimate policy reasons behind
them," he said.

House Minority Leader Ralph Becker, D-Salt Lake, also signed the letter but
did not attend Wednesday's news conference.

Other Utah government entities have chimed in on the potential merger. On
Tuesday, the Davis County Board of Commissioners added its voice to the
dissenters through a resolution.

"The county urges Congress and appropriate federal agencies to carefully
scrutinize US Airways' unsolicited merger with Delta Air Lines to guard
against the potential for anti-competitive behavior," the resolution states.

Commissioner Dannie McConkie said there are about 25,000 employees at the
airport. "Many of those people live in this county," McConkie said.

McConkie said he feared that a merger would eliminate Salt Lake City as a
hub and the potential for a direct flight to Europe.

Commissioners plan to send their resolution to Gov. Jon Huntsman Jr., Utah's
congressional delegation and the U.S. attorney general.

Last week, the Salt Lake City Council adopted a joint resolution with Mayor
Rocky Anderson expressing a preference that Delta emerge from bankruptcy as
a stand-alone carrier. The resolution also urged federal officials to
"carefully scrutinize US Airways' unsolicited merger with Delta Air Lines to
guard against the potential for anti-competitive behavior, to ensure a level
of competition among airlines that will benefit the traveling public and to
ensure that the high level of air service to Utah and the Intermountain West
is continued."

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