Election 2010: Airlines Lose Key Merger Opponent in the House with Oberstar Defeat
For years, Rep. James Oberstar (D-MN) has been synonymous with the airline industry in the House of Representatives. Now, he's been dethroned by, of all people, a former pilot for Northwest Airlines. This means the airlines will lose a key opponent when it comes to mergers, though to be fair, Oberstar rarely if ever had an impact on the outcome of those mergers.
Oberstar had been elected to Congress 18 straight times and had rarely been challenged seriously. But now, he's out after Chip Cravaack squeaked out a win by a few thousand votes.
There's no question that Cravaack won't be a concern for airlines. He comes from the shrinking-government, pro-business mindset that dominated many of candidate platforms this year. And there really doesn't seem to be other candidates ready to carry the torch on the merger issue, at least not yet.
Oberstar is currently the chair of the House Committee on Transportation and Infrastructure, and he has used that as a bully pulpit to decry airline mergers, even to the point of suggesting re-regulation to stop them. Though Congress has no official jurisdiction on merger approval, that didn't star Oberstar from trying. Of the Delta/Northwest merger, an Oberstar spokesperson said:
We have no legal authority to block the merger, but we can continue to raise issues about it and ask the [Transportation Department] and [Justice Department] to address them. Simply put: Jim may be able to run out the clock on this.The idea there was to delay merger approval long enough that President Obama would have been in office and a more hardline stance could have been adopted. It didn't happen.
When the United/Continental merger came around, Oberstar continued to fight (pdf).
If allowed to proceed, this merger will move the country far down the path of an airline system dominated by three mega-carriers. This path began with the approval of the Delta-Northwest merger in 2008, which I warned would create great pressure for other large airlines to merge. Now my fears are being realized, with the announcement of the proposed United-Continental merger.Once again, he failed to have an impact on the merger and it sailed through. Lately, his focus has turned to concern about the Southwest/AirTran merger.
In sum, the future of competition among airlines at every level of the industry, legacy and low-cost alike, is at stake in the Southwest-AirTran merger and should frame the Justice Department's review. I urge the Antitrust Division to consider this merger's special significance to the evolution of the U.S. airline industry, and to take all available action, including the pursuit of injunctive relief, to remedy any anticompetitive effects that may flow from Southwest's acquisition of AirTran. Competition and innovation by low-cost carriers must be preserved.Once again, it's not expected that Oberstar's stance will have an impact, but he does provide a counter-voice. He acts as a thorn in the side of the airlines and makes them work harder to gain approval. He also carries with him a great deal of knowledge and political experience around the airline industry so it helps his arguments carry more weight.
Now with Oberstar gone, I find it unlikely that anyone with nearly as much clout will step into that role but that doesn't mean smooth sailing for airlines. While Oberstar rarely had an impact on outcomes, he did push the airlines to work harder. His stances were well-known and the airlines knew how to work with him. With him gone, the airlines will certainly be happy to be relieved of that pressure, but then again, the devil you know is usually better than the devil you don't.
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