Some in Congress seek scrutiny of Mesa Air bid


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Some in Congress seek scrutiny of Mesa Air bid
Mon November 10, 2003 08:10 PM ET

By John Crawley
WASHINGTON, Nov 10 (Reuters) - A handful of U.S. House and Senate lawmakers have asked the Bush administration to closely examine Mesa Air's proposed hostile takeover of Atlantic Coast Airlines Holdings Inc. (ACAI.O: Quote, Profile, Research) , raising potential competition concerns.

Reps. Joe Wilson, a South Carolina Republican and assistant majority whip, and Sen. Gordon Smith, an Oregon Republican and Commerce Committee member, are among the lawmakers who have expressed concern recently in letters to senior officials about Mesa's plans.

"I respectfully request that you investigate Mesa Airlines' hostile takeover of Atlantic Coast Airlines," Wilson wrote to Transportation Secretary Norman Mineta.

Wilson said he was concerned Mesa Air Group Inc. (MESA.O: Quote, Profile, Research) will derail Atlantic Coast's plan to offer low-fare service from Washington D.C.'s Dulles airport in competition with United Airlines.

Lawmakers have also contacted Transportation Department Inspector General Kenneth Mead, an agency and industry watchdog who is conducting a separate review of competition on regional airline routes.

Atlantic Coast said in July it planned to end long-standing ties to UAL Corp.'s United Airlines (UALAQ.OB: Quote, Profile, Research) to start a low-fare carrier based at Dulles. Analysts have called the plan risky.

Mesa has launched a takeover bid, which would create the nation's largest regional airline. The carriers have sued each other over the takeover proposal.

A spokesman for Mineta said the agency was monitoring the situation and would not comment further. A spokesman for Mead said that he was also reviewing the correspondence and would not comment.

Justice Department antitrust enforcers and transportation regulators are expected to review any potential impact of any merger on domestic routes, ticket pricing and service to small communities.

But a source close to the matter said it was "a stretch" at this point to say that the Bush administration had any immediate concerns as some have claimed.

Atlantic Coast has said that Mesa's bid would prevent it from establishing an "economically viable" low-cost airline.

A representative from Mesa had no immediate comment.

Many members of Congress, especially those from rural areas, are sensitive to the impact that airline mergers have on service to their communities.

Fierce congressional lobbying, mainly over competition concerns in the eastern U.S., helped to derail United's plans to buy US Airways (UAIR.O: Quote, Profile, Research) in 2001.

© Reuters 2003. All Rights Reserved.
Frank the Tank ! Frank the Tank !
Many members of Congress, especially those from rural areas, are sensitive to the impact that airline mergers have on service to their communities.

[/ QUOTE ]And they think that ACA won't drop service to such unprofitable cities the moment United's no longer paying them to? They're dreaming!

It's more than a little pathetic when the ACA board has to call in favors from friends in congress because they didn't enact adequate takeover protection in their bylaws. Didn't these people see Barbarians at the Gate or even Wall Street?
Ditto what Aloft said.

Jimmy Joe Bob in W. Virginia probably thinks he's going to upgrade from a Jetstream to one of those fancy new sevum-thirtie-sevum's if they're able to scare Mesa off with a government investigation.

Actually, the smaller cities in that region will see less service and higher fares because many of the markets will be handed on a silver platter to USAirways Express.
Most of our current airline service in WV is provided by USAirways Express now anyway. Removal of United / ACA service will have little impact on service in this region except at a few select airports such as Charleston, which I highly suspect ACA will keep going, even as a LCC.

On the wider topic of Mesa/ACA, if Mesa can use United as a means to bully ACA (or if United can use Mesa to bully ACA, which ever way around it is working), then surely ACA has a right to hire its own bully to fight back.