Political tide turns against airline mergers
In her waning days as Secretary of Transportation, Elizabeth Dole is watching the political tide turn against the massive airline industry consolidation she helped orchestrate. The recent decision by an administrative law judge to recommend against the merger of USAir and Piedmont airlines shocked the two companies and put the Department of Transportation in a difficult situation. The judge's decision, though subject to being overruled by the DOT, may signal a change in the department's view of big airline mergers, industry analysts say.
``There is no doubt the department is coming under a lot of pressure and a lot of criticism for not taking a tougher line earlier with all of these mergers,'' says Peter Cappelli, an economics professor at the University of Pennsylvania's Wharton School. ``The sense of the public now is that they have gone too far.''
Long lines, lost luggage, and a recent tragic accident have pricked the public consciousness deeply, and Congress has begun to respond with a spate of consumer-protection bills.
And as air fares rise, so does pressure to show that DOT is not just a rubber stamp for the airline industry. This, despite the fact the department has yet to say ``no'' to a major airline merger.
Even Alfred Kahn, former head of the now-defunct Civil Aeronautics Board and a staunch proponent of deregulation has recently come to be critical of the department's enforcement of the United States's antitrust laws.
``It seems to me, DOT never met a merger they didn't like,'' Mr. Kahn, now a Cornell University economics professor told the Associated Press. ``What they did in effect was let the elephants go through, and now they're straining at a gnat.''
The opinion of Kahn and others that reasonable enforcement of the nation's antitrust laws is needed to preserve competition and prevent virtual market monopolies comes late in the game, as does legislation introduced earlier this year in the Senate to strip DOT of its power to approve mergers.
The department's merger authority is presently scheduled to be reassigned to the Justice Department's antitrust division in 1989.
Even though it is really just a tiny indicator, the negative ruling on USAir-Piedmont by administrative law judge Ronnie Yoder, an employee of the DOT, was seen by many analysts as an important political message.