Statement of Attorney General Tom Miller on Merger Being Called Off Between United Airlines and US Airways

[Iowa Attorney General Tom Miller is co-chair of the 35-state Airline Working Group of state attorneys general. He also has been a leader of approximately 22 states investigating and working on the UAL/USAir merger.]

I am very pleased that the UAL/USAir merger has been called off. I consider it good news for Iowa and Iowa air travelers.

The investigating States have viewed this merger as anti-competitive and likely a violation of anti-trust laws. It would have created the largest airline in the world, and it threatened to force the entire U.S. air transportation industry into the hands of three or four major companies within the next few years.

United's decision to withdraw from the merger is highly significant for Iowa businesses and consumers alike. We believe it will result in better ticket prices, more travel options, and better service for Iowa's citizens than if the merger had occurred.

A United/USAir merger would have put United in a position of unparalled dominance across the United States by giving the airline giant many of the nation's key hubs, particularly in the highly concentrated Northeast. In our view, this merger likely would have resulted in a distortion of the marketplace and serious harm to Iowa consumers, businesses and communities.

We know that true and effective competition cannot be mandated or regulated, but the antitrust laws can be enforced to protect the public. A forceful investigation by State Attorneys General and the U.S. Department of Justice in this case helped stop a merger that could stifle the competition necessary for the economic health of our state.

Deregulation of the airline industry has largely been a success, with better service and better prices for the traveling public, but in Iowa and many areas of the country deregulation has contributed to more costly airfares, a reduction in new entrants into air markets, and lessening competition among the major carriers with their grasp on key hubs. In Iowa, we know first-hand that the lack of real competition and meaningful access to air service can erode the economic development and vitality of our communities, as well as harming leisure travelers. The United merger posed real and lasting risks for Iowa.

The 35-state Airline Working Group of attorneys general has learned that the benefits of deregulation have yet to be realized in many parts of the country. We are taking steps to ensure access to the advantages of deregulation for our citizens, especially by supporting an open and fair competitive environment in which low-cost and new entrant airlines can compete to the advantage of business and consumers alike. The decision by United to drop this merger is another concrete example of our strong commitment to fair and healthy airline competition in Iowa and around the nation.

# # #