Cohen Statement on High Airfares in Memphis

MEMPHIS, TN -- With mounting concerns over airfares in Memphis, Congressman Steve Cohen (TN-09) held a news conference today to share his thoughts on this important issue and to explain the work he is doing to address this problem. Below is a statement Congressman Cohen issued during a House Judiciary Committee hearing on April 24, 2008 on the proposed merger between Delta and Northwest Airlines:

I view the proposed merger of Delta Air Lines and Northwest Airlines with an open mind. Whatever the ultimate outcome of this proposed merger, my greatest
concern is that Memphis International Airport continues to be a major air passenger hub, whether for a combined Delta-Northwest or for a Northwest that remains independent.

I understand the economic realities faced by U.S.-based legacy airlines, and I hesitate to oppose this merger outright if such a merger is critical to preserving the hub in Memphis. I have received assurances from representatives of Delta and Northwest that the combined company would continue to operate a hub at Memphis International Airport and have no reason to doubt that these assurances were made in good faith. Additionally, both the Memphis Regional Chamber and the Memphis-Shelby County Airport Authority support the merger and I give weight to their opinions.

Nonetheless, for now, notwithstanding the good-faith arguments of merger supporters, I remain concerned that Memphis will lose its hub status once the proposed Delta-Northwest merger is consummated. While Delta and Northwest have committed to maintaining the Memphis hub, I recall that American Airlines made similar assurances that it would maintain TWA’s St. Louis hub after its acquisition of TWA in 2001. Although St. Louis nominally remains a ‘‘hub’’ for American, American has dramatically reduced service at St. Louis since acquiring TWA, cutting the number of flights and passengers through St. Louis almost in half. Moreover, even though I take Delta and Northwest at their word, a combined carrier would have a strong incentive to close the Memphis hub eventually. One of the rationales for merging the two airlines is to achieve efficiencies by eliminating duplicative operations.

Given that Memphis is less than 400 miles from the proposed new Delta’s headquarters and hub in Atlanta, I believe that the new Delta will close or significantly scale back operations at Memphis. The closing of an air passenger hub would be devastating to my district. The loss of jobs and economic activity would be significant. Residents in my district would suffer a dramatic loss in the number of nonstop flights to cities around the world.

Moreover, I do not see any other airline that would be willing or able to play the role in Memphis that Northwest currently plays. I also share some other concerns of merger critics. The Delta-Northwest merger threatens to spark a round of consolidation among the largest U.S. air carriers. Potentially, half of the air travel market could be controlled by just three mega-carriers. This loss of competition could lead to higher prices for consumers and poorer service. Moreover, given the intimidating size and potential market dominance of these carriers, I question whether any of the low-cost carriers could provide the necessary competitive pressure on the major carriers to keep air fares affordable for most consumers.

Additionally, I am concerned that workers at both carriers, but especially at Northwest, will be harmed by this merger. Somewhat disconcertingly, Delta appears to be actively discouraging its non-pilot employees, who are non-union, from seeking union representation. I fear that this is indicative of how a merged Delta-Northwest, which would primarily be run by current Delta management, intends to manage labor relations. I hope Delta will refrain from current and future unionization efforts and allow its non-pilot employees to decide, without management interference, whether they wish to be represented by unions.