The Civil Aeronautics Board yesterday turned down Eastern Airlines' bid to acquire National Airlines, clearing away the last serious obstacle to a merger of National and Pan American World Airways, assuming presidential approval.
In a technically tentative decision, the CAB instructed its staff to draw up a formal order denying Eastern's application on the grounds that a merger between the two Miami-based airlines would substantially lessen competition.
CAB members expressed particular concern about the heavily traveled Florida-Washington and Florida-New York routes which are now largely dominated by Eastern and National. A merger would give the combined carrier a near-monopoly on both corridors, especially from the capacity-limited Washington National and New York LaGuardia airports, which other airlines would have difficulty breaking, board members suggested.
The New York-Washington route and air travel within Florida would also see a loss of actual competition if an Eastern-National combination were allowed, they said. Board members also indicated that the merger would result in a substantial loss of potential competition since the two airlines' route systems overlap considerably, making them logical entrants on each others' routes.
Frank Borman, Eastern's chairman and president, said yesterday he was disappointed that the CAB didn't believe, as he did, that any currently competitive service lost by way of the proposed merger would have soon been replaced by other airlines in the increasingly deregulated environment.
Barred from acquiring National's domestic routes, Borman said Eastern would fight hard to acquire some of National's international routes. "Eastern's need to expand and grow remains unchanged and we will continue to aggressively pursue our expansion plans with Miami-London as our prime target," he said.
In its tentative decision in July to approve Pan Am's merger proposal, the CAB said it would not allow Pan Am to pick up National's Miami-Lon- don route automatically if its merger was consummated but would allow other airlines to apply for the route.
Borman said Eastern would also seek to acquire some of National's other overseas routes, including Miami to Amsterdam, Paris, Frankfurt and Zurich.
The CAB's action, on a 3-0 vote with member Richard O'Melia reserving his vote, virtually assures Pan Am of acquiring domestic routes it has long sought to supplement its international routes, as well as a fleet of 55 airplanes at a fraction of their cost in today's market.
Although the board's tentative decision in July also approved Texas International Airlines' bid to acquire National, the Houston-based airline has for all practical purposes dropped out of the fray by agreeing to sell to Pan Am the National stock it had acquired.
The board yesterday set Oct. 9 for consideration of its final order in the Pan Am-Texas International portion of the National merger case. Then the decision goes to the White House for President Carter's approval since the merger application involves foreign routes.
In another action, the board turned down Western Airlines' request that the board issue a formal written decision on its now defunct proposal to merge with Continental Airlines. After the board tentatively turned down the merger proposal in an open meeting in July, Continental withdrew from its merger agreement with Western. Board members yesterday agreed with general counsel Philip J. Bakes, who argued that the case was for all practical purposes moot and no useful purpose would be served by spending the board's resources on writing such an opinion.