DOT Judge Approves Takeover of Ozark Air

A Transportation Department hearing officer today recommended it approve Trans World Airlines’ $250 million takeover of Ozark Air Lines, concluding the merger would not “substantially reduce competition.”

The Justice Department last month opposed the merger, saying that it would have an anti-competitive impact on dozens of cities, especially St. Louis, where the two airlines have hubs and dominate air traffic.

But Administrative Law Judge John Vittone, recommending approval of the deal, concluded that the merger of the two carriers “has not been shown to substantially reduce competition in any relative market or to be contrary to the public interest.”

A final decision on the merger is to be made by Transportation Secretary Elizabeth Dole in early September.

TWA is the country’s fourth largest airline behind United, American, and Eastern, while Ozark, predominantly a regional carrier in the Midwest, ranks No. 18.

Vittone recommended that the two airlines be allowed to combine without any government conditions including labor protection provisions.

The hearing officer acknowledged that the fact TWA and Ozark together “control a very substantial percentage of gates at St. Louis was a matter of concern.”

But he argued that the evidence presented during recent hearings “does not demonstrate that conditions at the (St. Louis) airport are likely to prevent new entry or stop existing carriers from expanding operations at St. Louis.”

TWA and Ozark together hold 76% of the gates at St. Louis’ Lambert Field.

The Justice Department had argued that the deal would reduce competition in many of the 68 markets in which the two airlines provide nonstop service.