Schumer: Merger Cannot Jeopardize Flights for Upstate Businesses & Residents

SCHUMER URGES US AIRWAYS CEO TO ENSURE DEAL PRESERVES FULL UPSTATE NY AIR SERVICE, JOBS & LOW-COST FARES ñ MERGER COULD AFFECT SERVICE AT CITIES ACROSS THE STATE

With US Airways Planning to Take Over American Airlines, Senator Meets With US Air CEO to Raise Serious Questions Regarding Potential Takeover & How It Would Affect Upstate Service, Ticket Prices & Local Jobs

Schumer, Who Has Led the Fight to Increase Low-Cost Service Across NY, Highlighted That Cities From Buffalo to Binghamton, Newburgh to Albany & More Rely on Low-Cost US Air & American Airlines Flights

Schumer: Merger Cannot Jeopardize Flights for Upstate Businesses & Residents

U.S. Senator Charles E. Schumer today raised concerns over the prospect of US Airways taking over American Airlines and the effects such a takeover would have on air service and fares across upstate New York. Schumer, who has long fought to increase competition within upstate air service as a way to stimulate local economies and bring down sky high fares, met with US Airways CEO Doug Parker, and sent a follow-up letter asking questions regarding the potential takeover and how it would affect service upstate and jobs at local airports. In the event a merger goes through, Schumer is urging US Airways to maintain jobs, service routes, their hub at JFK and to keep ticket prices from increasing.

In April, US Airways filed an 8-K form with the Securities and Exchange Commission (SEC) to begin the process of a takeover of American Airlines, which is currently in bankruptcy and hopes to emerge from bankruptcy as a stand-alone carrier. In addition, US Airways made an agreement with American’s three labor unions, which are important first steps in what could be a takeover of American Airlines. In light of this potential takeover, Schumer is raising important questions with U.S. Airways CEO Doug Parker regarding the preservation of low-cost service in Upstate New York.

ìBringing together US Airways and American Airlines, two of the largest carriers that service airports across New York, should not jeopardize flights, kill jobs, or spike ticket prices for upstate businesses and residents,î said Schumer. ìOver the past years, with the expansion of JetBlue and Southwest, New Yorkers have come to rely on the benefits of more affordable airfares and more frequent service, both for leisure travel as well as the critical roles that they play in economic development. In light of this potential merger, I am urging US Airways CEO Doug Parker to answer serious questions about this takeover and how it would affect service upstate, because we cannot let upstate New York fall back on the slippery slope that leads to higher airfares and poorer service.î

Schumer noted that a primary factor in an increase in fares is a decrease in competition among airlines in a given market. US Airways and American Airlines are major carriers in Upstate New York, and have had significant presences at most upstate airports for decades. Several markets throughout New York are serviced largely by both US Airways and American Airlines. For instance, US Airways flies from Buffalo, Rochester, Syracuse and Albany to Boston, Charlotte, LaGuardia, Washington D.C. and Philadelphia. US Airways also flies from Ithaca to LaGuardia and Philadelphia, Elmira, Binghamton, Newburgh and Westchester to Philadelphia, and from Islip to Philadelphia and Washington D.C. American Airlines has a hub at JFK and a so-called ëFocus Cityí at LaGuardia, and flies from Chicago to Buffalo, Rochester, Syracuse, Watertown, and Westchester. American Airlines also flies from JFK Airport and LaGuardia to many other destinations.

In response to the news of this potential merger, Schumer met on Wednesday with US Air CEO Douglas Parker and followed up with a letter laying out his concerns that the merger could adversely affect air fares and service upstate. Schumer underscored that when one air carrier dominates a market, fares can quickly become unaffordable, and that several carriers in a market gives the flying public more options of when and where to fly and can lower ticket prices. Schumer also noted that the airline industry is a large employer in New York and any merger should maintain the tens of thousands of workers that the two airlines employ.

In his letter and meeting, Schumer spelled out specific questions for Parker that relate to upstate air service including:

• Will you commit to maintaining the New York jobs of both US Airways and American Airlines?
• Will you commit to maintaining service at all the locations Upstate and in the City which are currently serviced by US Airways and American?
• JFK is currently a hub for American. Would you maintain that hub?
• Currently, American is growing at JFK. Can you commit to continue this growth?
• How can you ensure that a combined airline will offer the same competitive low prices that the two airlines do separately? How will a combined airline improve price competition in the market generally?

Schumer has long led the effort ñ which has utterly transformed upstate air travel for businesses, tourists and local residents alike ñ to bring new, low-cost carriers like Jet Blue and Southwest to Upstate New York. In 2001, Schumer led the fight to block the merger of US Airways and United Airlines citing the deleterious effect it would have on competition in the upstate air service market. In 2003, Schumer helped to pave the way for new low-fare service to Upstate New York by convincing the Justice Department to block a hostile takeover of Independence Airline by Mesa Airlines.

A copy of Senator Schumerís letter appears below:

Dear Mr. Parker:

Recent media reports indicate the potential for a merger between US Airways and American Airlines. I am concerned that a combination of two major carriers in the industry could lead to an increase in air fares, a loss of jobs and a diminution in service in New York, which is why I ask that you to provide my office with information on how you plan to maintain services to New York in the event that the airlines are allowed to combine.

I am also concerned about how the proposed merger will affect fare prices at New Yorkís regional airports. As a general rule, consumers benefit from having more airlines competing for their business by offering lower fares; in this case, the combination of two major carriers could eliminate some of that competitive pressure and force New York consumers to contend with higher prices.

The airline industry is a large employer in New York and any merger should maintain the thousands of workers that these two airlines employ. At a time when our economy is starting to pick up momentum, we simply cannot afford to lose good jobs in the airline industry.

A merger between US Airways and American Airlines could have a major impact on millions of passengers, hundreds of communities, and our national economy. The State of New York has long been serviced by both airlines whose frequent and quality flights have helped grow our stateís economy. It is critical that New York maintains these services in order to thrive in an increasingly interconnected global marketplace, as they generate billions of dollars in economic activity. It is of great concern that a merger of US Airways and American Airlines could jeopardize the frequency of flights that citizens, tourists and business across the state depend on. Major American Airline hubs like John F. Kennedy International Airport (JFK) and other important terminals that American serves like LaGuardia could face a decrease in number of flights offered. In addition, American operates a hub at JFK, while US Airways has their hub at Philadelphia, and I am concerned that a merger could lead to a shift in service away from the New York hub. Moreover, investments made by the airlines at New York airports have spurred economic growth in the state which is why itís important that a combined airline not only maintains services but also continues to invest in your New York operations. I call on your airline to remain committed to providing high quality and frequent flights to New Yorkís communities regardless of the outcome of US Airways attempted takeover.

Specifically, I ask that you answer the following questions:

• Will you commit to maintaining the New York jobs of both US Airways and American Airlines?
• Will you commit to maintaining service at all the locations Upstate and in the City which are currently serviced by US Airways and American?
• JFK is currently a hub for American. Would you maintain that hub?
• Currently, American is growing at JFK. Can you commit to continue this growth?
• How can you ensure that a combined airline will offer the same competitive low prices that the two airlines do separately? How will a combined airline improve price competition in the market generally?

New Yorkers benefit tremendously from the air service provided by both US Airways and American Airlines and I believe that both companies can certainly ensure a better future for the state by continuing their commitment to the New York airline market and the communities that depend on their services. I share the goal of building a prosperous future for the airline industry, and look forward to working with you to make that goal a reality.

Sincerely,

U.S. Senator Charles E. Schumer