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US Airways Group Inc. itself has admitted that major airlines, including its proposed merger partner, UAL Corp., bully smaller carriers, an influential lawmaker charged June 21 as members of the U.S. Senate Commerce Committee fretted that the deal would cut competition in the industry. Meanwhile, Washington entrepreneur Robert L. Johnson, who would head a new airline cobbled from assets divested in the United-US Airways deal, said he had forgiven Rep. John Oberstar, D-Minn., for an allegedly racist remark made at a hearing last week. Oberstar likened the arrangement to a “plantation.” Johnson, who is black, called the remark racist, and Oberstar has apologized. The Commerce Committee became the third congressional committee in eight days to hold a hearing on the $11.6 billion UAL-US Airways merger. The deal would combine UAL’s United Airlines, the nation’s largest carrier, with the sixth-largest. As at the previous hearings, committee members generally criticized the deal. Only Sen. John D. Rockefeller IV, D-W.Va., gave his unequivocal support. Committee Chairman John McCain, R-Ariz., led a cadre of lawmakers who said the deal would further enhance United in a market already dominated by a few major carriers. McCain produced a letter that US Airways Chairman Stephen M. Wolf sent last year to Transportation Secretary Rodney E. Slater, in which Wolf complained that United was trying to squeeze US Air out of Dulles International Airport in suburban Washington, D.C. “The unrelenting attempts of the major trunk carriers to undermine the operations and expansion of smaller carriers, both domestically and internationally, is a clear and present danger to free market competition,” Wolf wrote in the letter. US Airways and United have claimed that low-cost carriers such as Dallas-based Southwest Airlines Co. and Tempe, Ariz.-based America West Holding Corp., offset the loss of competition caused by their merger and others like it. Wolf’s letter seems to contradict that assertion, McCain said. Wolf countered that the letter demonstrates US Airways’ need to expand. The company sought government protection not because low-fare carriers couldn’t compete, but because US Airways’ niche as a mid-size carrier is rapidly disappearing, Wolf said. But ranking member Ernest F. Hollings, D-S.C., said he found that claim troubling: “They come here before the committee and say the only way to become more competitive is to become more monopolistic,” he said. Hollings and others also questioned the airlines’ plan to spin off 222 of US Airways’ landing slots at Reagan National Airport, also in suburban Washington, into a new airline called DC Air. Johnson, the founder of Washington-based BET Holdings Inc., would run DC Air, but some have questioned the airline’s resources and resolve to compete effectively with US Airways and United. “I know Mr. Johnson isn’t an ingrate,” Hollings said. “Why should Mr. Johnson start competing [with US Airways and United] when without them he wouldn’t have an airline to begin with?” Hollings’ comments echoed those last week by several House Transportation Committee members, including Oberstar. After the June 21 hearing, Johnson told reporters he has reconciled with Oberstar. “The man has acknowledged his mistake,” Johnson said. He added that he was not offended that Hollings and other senators had questioned his ability to run DC Air. Copyright �2000 TDD, LLC. All rights reserved.

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