The Justice Department said yesterday that it wants more time to investigate the competitive impact of the proposed merger of Texas Air Corp. and Eastern Air Lines Inc., particularly on routes in the Northeast, including the Washington-New York shuttle route.
The Justice Department's antitrust division said it had no position on the merger but said that the proposed transaction raises concern about reduced competition in the airline industry and should be investigated further.
In a filing with the Transportation Department, which must approve the merger, the Justice Department proposed a schedule of inquiry that would end on May 5. At that point, the Justice Department would submit its conclusions about whether DOT should begin hearings on the merger.
Hearings, which have been requested by members of Congress and by airline industry competitors, could stretch out the approval process by six months, according to Justice Department officials. "What we want to avoid is the scheduling of a six-month hearing by DOT in advance of determining whether a six-month hearing is necessary," said Charles F. Rule, deputy assistant attorney general for the antitrust division.
Yesterday was the deadline for comments to be filed with DOT on the proposed merger. Airline industry unions and other airlines filed as well. USAir filed comments yesterday calling for evidentiary hearings.
Clark H. Onstead, vice president of Texas Air, said yesterday that competitors are asking for hearings in the hope of delaying approval of the merger until after the peak summer travel season. "If they can get an evidentiary hearing going here, they can drag this thing out into the fall," he said.
The Justice Department said that the greatest area of concern about the proposed merger is services provided in the Northeast Corridor, which includes Washington, New York and Boston. In those areas, the combined market share of the two airlines would exceed 50 percent for flights on the routes between cities.
The Justice Department noted that the two airlines have overlapping service on flights between 33 pairs of cities.
The department also expressed concern about the limitation by the Federal Aviation Administration on slots -- landing and take-off rights -- at Washington National and New York's LaGuardia airports. The limited number of slots could make it difficult or impossible for another airline to enter those markets and offer competing service, Justice said.
"We obviously have a lot of competitors who would like to use the federal government to take one of the shuttles away from us," Onstead said. "There's more concentration in Pittsburgh than there would be at National or LaGuardia." He also said that there are five carriers with enough slots to start competing shuttle service.
Rule, of the Justice Department, said that the department hopes to help avoid a hearing if one is unnecessary or to narrow the issues or to correct potential problems as it receives evidence from the two companies about the competitive impact of their proposed merger.
He said that the airlines had agreed to a schedule for producing information about the combination that would allow Justice to reach its conclusions by the May 5 date.
A spokesman for DOT said that the department has not had a chance to review the comments it had received and would have no comment on any of the filings.