USAir Group Inc. and Piedmont Aviation Inc. yesterday urged the Department of Transportation to approve a merger of the two airlines, vociferously rebutting the conclusions of a DOT hearing officer who said that the merger should be rejected.
Turning down this merger after approving the combination of other, larger carriers would be "grossly unjust" and would leave the two smaller airlines "to compete as separate entities against larger carriers strengthened by mergers approved only a few months ago," the two airlines argued in a brief filed jointly with the agency.
Administrative law judge Ronnie A. Yoder argued against the merger of the two East Coast carriers in conclusions he filed on Sept. 21.
Yoder said that the merger would substantially reduce competition in a number of markets and said there appeared to be significant barriers to new entry in some markets that would prevent new competition from emerging.
DOT has until Oct. 30 to make a final decision on the proposed $1.59 billion merger, which would create the nation's seventh-largest airline.
The merger is opposed by America West Inc., a Phoenix-based carrier that provides service from Baltimore-Washington International airport and that would like to provide service from Washington National Airport, USAir's headquarters. Piedmont is headquartered in Charlotte, N.C.
America West offered to withdraw its opposition in exchange for slots -- landing and departure rights -- at National and at New York's La Guardia Airport, according to the USAir-Piedmont filing.
John E. Gillick, attorney for American West, said the airline is seeking slots but has offered no trade-off.
Landing and departure rights at National, La Guardia and a few other extremely congested airports are limited by the federal government.
Thus, an airline seeking to serve those airports must acquire slots from another carrier. America West yesterday filed a brief supporting the administrative law judge's conclusion.
The decision on whether to approve the merger falls to Matthew V. Scocozza, DOT's assistant secretary for policy and international affairs.
DOT has been without a secretary since Elizabeth Hanford Dole's departure last month and Deputy Secretary Jim Burnley, has disqualified himself from the case because he had been negotiating with USAir's law firm for a job.
USAir and Piedmont argued yesterday that Yoder's conclusion required ignoring precedents set by DOT, the Department of Justice's merger guidelines and 13 years of court decisions. The Justice Department withdrew from the USAir-Piedmont proceeding, saying that "it could not establish that the merger would eliminate substantial competition.
The airlines noted that USAir acquired $800 million worth of Piedmont's stock "in reliance on the Department's merger policies and precedents." The carriers said they "deserve the treatment that was accorded their larger competitors in merger decisions made by the Department just last year."