Northwest Orient Airlines, the largest U.S. carrier across the Pacific, said yesterday that it might have to retrench or even withdraw if United Airlines is permitted to acquire the vast Pacific presence it is seeking.
Attorney Ronald D. Eastman, representing Northwest, made that argument yesterday as the Transportation Department heard testimony on what is potentially the biggest civil aviation deal in history: United's plan to purchase Pan American World Airways' Pacific Division for $715.5 million.
The department has promised a decision by the end of October on the proposal. Proponents say it would result in two strong U.S. airlines across the Pacific -- Northwest and United -- instead of the present arrangement, which has a strong Northwest and a weakening Pan Am with United playing a small role with one flight a day between Seattle and Tokyo.
The money, it is argued, would give Pan Am the financial stability it needs to solidify its North Atlantic and Latin American operations.
Attorney Charles Miller, representing United, said, "United has the financial ability and the commitment to become a strong third carrier to compete with Northwest and Japan Air Lines." He said the transaction would enhance competition because United plans to increase service on the Pacific "which would bring downward pressure on fares."
Former Transportation secretary William T. Coleman Jr., representing Pan Am, said that Pan Am had concluded it "can no longer be a carrier all over the world." If the transaction is disapproved, Coleman said, "It would be irresponsible for Pan Am to walk away from the Pacific, but we would not serve it in the way United Airlines will serve it."
Northwest's Eastman, on the other hand, said that if the transaction is approved, "Of course prices will go up and we will participate in these increases." He argued that the combination of United's strong domestic network to feed the Pacific Division and United's powerful computer reservation system used by thousands of travel agents would give it a unique advantage.
Justice Department Attorney Connie Robinson said that the department does not oppose the transaction, if United is required to spin off its Seattle-Tokyo route. Justice argues that United in its present role applies downward pressure on fares, but that pressure would disappear if United gains full membership in the club with Northwest and Japan Air Lines.