Sen. Chuck Grassley today released a letter he sent to regulatory officials urging vigorous scrutiny of the three-part deal that includes American Airlines' purchase of Trans World Airlines.
Grassley's letter to Attorney General Janet Reno and Transportation Secretary Rodney Slater urged them to "review and conduct a thorough examination of the proposed American/TWA acquisition with the attendant provisions and its impact on the traveling public." Grassley also expressed concern about the proposed American purchase of 49 percent of DC Air and a joint venture with United to run the US Airways Shuttle, an air service linking Boston, New York and Washington, DC.
Grassley expressed serious concerns that the proposed transactions could raise airfares, reduce competition between airlines and diminish air travel options for consumers, especially those from rural and under-served communities. In the past, Iowa and other Midwestern communities have experienced less flight frequency and higher airfares than other parts of the country.
"Adequate air service is essential to the economic prosperity of smaller communities," Grassley said. "With a slowing economy, even the threat of route elimination or cut-backs, or higher airfares would be extremely detrimental to these communities." Some reports suggest that as much as 20 percent of TWA's flights could be terminated.
TWA and its affiliate Transworld Express provide service to Burlington, Cedar Rapids, Des Moines, Sioux City and Waterloo. American and its affiliate American Eagle provide service to Cedar Rapids, Des Moines, Dubuque and Waterloo.
If the proposed American-TWA and United-US Airways transactions are approved, the two remaining airlines will control more than 50 percent of the United States market. "These deals surely could prompt other airlines to consider consolidation," Grassley said.
Grassley had previously written to regulatory officials regarding the United-US Airways proposed transaction. He is the third most senior member of the Senate Judiciary Committee, which has jurisdiction over antitrust matters.