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Delta-Northwest Merger Raises Concerns Over Competition, Price Hikes

A newly announced Delta-Northwest airline merger proposal hit resistance on Capitol Hill Tuesday, where key Democrats say they’re concerned the plan will reduce competition and drive up prices.

One committee has scheduled a hearing looking into the airline deal, and at least two other panels plan on doing so.

House Judiciary Committee Chairman John Conyers, D-Mich., announced Tuesday he would hold a hearing April 24 that would feature Delta chief Richard H. Anderson and Northwest chief Douglas M. Steenland.

Rep. Jim Oberstar, D-Minn., announced his dismay over the deal to create the largest air carrier in the world. Oberstar chairs the House Transportation and Infrastructure Committee and likely will hold a hearing on the proposal in the coming weeks.

“I’m concerned about the effect this merger could have on the aviation industry,” Oberstar said, according to a release from his office. “It will trigger a cascade of mergers. You will wind up with three mega, global air carriers. And then what voice does an air traveler in International Falls or Minot, North Dakota, have? None."

Later in the day, Sen. Herb Kohl, D-Wis., also said he plans to hear testimony on his Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights. He expressed concerns about airline competitiveness.

"A competitive airline industry is essential to both business and leisure travelers and the health of the American economy," Kohl said in a statement.

"While we understand the financial pressures under which the major airlines have been operating, it is nonetheless also vital that this deal does not lead to fare increases and service reductions. ... We are especially concerned with the consequences of this deal for travelers in small and mid-sized markets, many of whom already have the fewest choice for air carriers today," he continued.

Others have expressed cautious optimism, with Republican Sen. Saxby Chambliss of Georgia issuing a statement saying he hopes Delta keeps its Atlanta hub.

"The bottom line is Georgia has always been home for Delta and that is the way it should remain for many more years. I look forward to further details on this merger and will continue working to ensure that the interests of all parties involved, the employees and the customers in particular, are met in the strongest way possible,' he said.

Under the proposed merger, valued at $3.6 billion, the carrier would be named Delta and would keep Delta's Atlanta base and Cincinnati hub. Executives from both airlines are aiming to close the deal by year's end and avoid a repeat of the 2001 failed merger of United Airlines and US Airways, which fell apart amid antitrust concerns.

If the deal becomes final, Delta shareholders will get a bigger company, while Northwest shareholders would get a 16.8 percent premium over Monday's closing stock prices.

Consumer advocates and employees are not excited about the deal, with travelers concerned about higher ticket fares and fewer destinations, and two of Northwest's largest unions declaring its opposition, saying the plan will further set back the airlines' under-funded pension programs.

Both air carriers have previously announced domestic capacity cuts for this year. Delta suggested no more are in the works, though it didn't rule out more in the future if fuel prices continue to rise.

House Transportation Committee spokesman Jim Berard said the deal could mean smaller communities losing flight service, and consolidation could turn into job losses and higher prices due to lack of competition.

But Berard acknowledged that Congress has only a small part to play in the merger's approval.

“Congress does not have a direct role in the negotiations,” Berard said, but “we can ask the important questions.”

Berard said that while no hearing has been scheduled yet, one will be soon, probably within the next month. He noted that Congress has no constitutional authority over the deal, but any hearings would be held with two specific audiences in mind: Officials at the Transportation and Justice departments. Both agencies must sign off on the merger.

Some lawmakers have also said they are looking forward to a healthy partnership.

"As a sitting member of the Transportation Committee that will review the merger, I must reserve my endorsement of the merger until the hearings have been completed. However, I am quite pleased that the merger plan calls for the continuation of CVG as a hub for the new combined airline," said Rep. Jean Schmidt, R-Ohio, whose district contains the Delta hub.

The House’s top Republican, Rep. John Boehner of Ohio, added that the merger is part of the industry trend.

“The benefits are important to both airlines,” Boehner told reporters Tuesday morning. “There's been consolidation in the industry for the last 25 years. And frankly, it's going to continue."

FOX News' Chad Pergram and Greg Simmons and The Associated Press contributed to this report.