US Airways' hostile bid for Delta Air Lines moves into the political realm this week when a U.S. Senate panel explores the potential effect of industry consolidation on fares, air service and jobs.
US Airways CEO Doug Parker and Delta CEO Gerald Grinstein will testify at Wednesday's hearing before the Senate Committee on Commerce, Science and Transportation, chaired by Sen. Daniel Inouye, D-Hawaii.
Federal regulators, consumer advocates and economists are also on the witness list.
"We're looking forward to it," said C.A. Howlett, US Airways' top lobbyist. "The instinctive reaction ... is to be naturally skeptical. But the market is driving what's occurring."
Delta executives declined interview requests. US Airways -- itself a merged airline formed by the 2005 takeover of the old US Airways by America West -- wants to buy Delta out of bankruptcy reorganization.
The deal would create the nation's largest domestic carrier. Delta, already the USA's third-biggest carrier, wants to remain independent.
Some lawmakers and other critics of the deal say it could reduce competition and raise ticket prices, especially in cities along the East Coast where both are strong. At Reagan Washington National Airport, for example, US Airways and Delta combined control a majority of the gates and landing slots.
But US Airways argues the merger would cut costs and improve service nationwide.
Sen. Olympia Snowe, R-Maine, who serves on the Commerce Committee, met with Grinstein last week and will meet this week with Parker. Delta and US Airways together control 60% of flights from Portland, Maine's largest city.
"Our state and the traveling public should not be put at a disadvantage because of airline consolidation," she said in a statement.
Last week, Sen. Charles Schumer, D-N.Y., sent a letter to Parker, demanding to know his plans for air service to upstate New York airports if the merger occurs.
In a press release, Schumer noted Delta and US Airways together operate more than 60% of the flights from Binghamton, N.Y.
"We could see fares begin to rise and flights disappear," he said.
US Airways says it has lowered fares across New York since the 2005 merger with America West.
On Jan. 10, US Airways raised its original mid-November bid for Delta by 20%, to $10.2 billion. US Airways has given Delta's creditor committee a Feb. 1 deadline to respond.
United Airlines, the USA's No.2 carrier, has held preliminary merger talks with Continental Airlines. And Northwest Airlines, which filed for bankruptcy protection the same day in the same New York courthouse as Delta in 2005, hired an investment banker to explore a deal, possibly one with Delta.
Any such merger would have to be approved by the Justice Department and the Department of Transportation.
Congress has no official role to intervene. But vocal opposition from lawmakers could make a deal politically harder to get done.
Rockefeller: "I am becoming increasingly convinced that some regulation may become an option to make sure small communities are not harmed by consolidation."
Parker said his improved bid for Delta has generated little response from the Delta creditors and that time is running out on the offer.
The creditors' decision came after an efficient campaign by Delta to torpedo the offer both publicly and behind the scenes.
The creditors are also demanding a new board for Delta that favors consolidation as a strategic option.