The Wonders of Deregulation: Even less competition in the cards for the airline biz

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UAL, Continental Await Holders’ Votes After U.S. Clears Merger
By John Hughes

Aug. 28 (Bloomberg) -- UAL Corp.’s United Airlines and Continental Airlines Inc. await shareholder approval next month for their $3 billion all-stock merger creating the world’s largest carrier, after the U.S. government cleared the deal.

To win Justice Department backing, the companies agreed to give up rights for 18 daily round-trip flights at Newark airport in New Jersey to Southwest Airlines Co., and the agency said yesterday it had closed its antitrust review.

“Airlines are now using these slot-swap deals as trade bait,” said Bob Mann, a former American Airlines executive who runs consultant R.W. Mann & Co. in Port Washington, New York. “It’s the new grease for regulatory approval. Slots are one area where regulators like to see some give-ups.”

The Justice Department’s action moved UAL and Continental toward their goal of closing their merger by Oct. 1. Newark Liberty International Airport will be a new destination for Southwest, the largest discount airline. Continental operates a hub at Newark for domestic and international flights.

“The transfer of slots and other assets at Newark to Southwest, a low-cost carrier that currently has only limited service in the New York metropolitan area, and no Newark service, resolves the department’s principal competition concerns,” the Justice Department said in a statement. .............(more)

The complete piece is at: http://noir.bloomberg.com/apps/news?pid=20601087&sid=aO2ZuZuLfWRs&pos=4