government filing
 

December 14, 2006

The Honorable Mary Peters
Secretary
U.S. Department of Transportation
400 Seventh Street, S.W.
Washington, DC 20590

Re: Docket 2006-25275

Dear Secretary Peters:

The Business Travel Coalition is writing to formally request that the U.S. Department of Transportation reopen and extend the China route case proceeding to such time as the agency can fully consider the competitive ramifications of potential major airline merger proposals, in particular the reported potential merger of United Airlines and Continental Airlines--two key applicants in this route proceeding.

If a United/Continental merger were to occur, and either airline were to be awarded the new China authorities, then the “new” United/Continental would command 42 weekly U.S.-China frequencies followed by Northwest Airlines with 21 frequencies and American Airlines with 7. In BTC’s view, such an outcome is inconceivable and would have dramatic negative impacts for business travelers in terms of sharply higher airfares and fewer service options.

In fact, such an outcome would produce the exact opposite result to a pro-competitive outcome that the Department is seeking in this case. Instead of infusing a currently competitively concentrated market with new service choices and alternatives, an unthinkable competitive imbalance would be the result.  U.S. business travelers would be the losers.

There is no U.S.-China protocol that would prevent the Department from holding its decision in abeyance and thus avoid prematurely reaching a decision in this case. The Department should not be rushed in a decision with such strategic, long-term implications for travelers, communities and the competitive structure of this important market.

In the regrettable possibility that the Department’s analysis is that these merger discussions and regulatory processes will take too long to forestall a China-case decision, BTC urges the Department to require the frequencies that would be awarded in this case to either United or Continental be returned for immediate reallocation in the event the two applicants announce a merger agreement.

Sincerely,

Kevin Mitchell

Chairman

Copy:  The Honorable James Oberstar