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Airlines Expect May 1 Merger of Data Systems

From Associated Press

American and Delta airlines still hope to merge their computerized reservations systems by May 1, despite a Justice Department antitrust investigation, airline officials said Wednesday.

The department, which on Jan. 1 took over jurisdiction of airline industry mergers from the Transportation Department, has sent requests for information to both airlines and has issued several “civil investigative demands” to other companies that might be affected, according to Delta and American officials.

Justice spokeswoman Amy Brown confirmed that a civil investigation of the merger is under way but said department rules prohibit disclosure of actions taken during the inquiry.

She said it would not be unusual in such an investigation to seek information from competitors and others who might have an interest, as well as those involved directly in the merger.

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The combined American-Delta system would control 44% of the nation’s airline reservations.

American’s Sabre system is already the largest in the industry, handling about 35% of reservation business. Delta’s Datas II has about a 9% market share. The rest is divided among three other systems, also tied to major carriers.

All such systems, which are leased by travel agents, are set up to make reservations on any airline.

The merger does not need federal approval, but the department has 30 days from the filing of an announcement to bring an antitrust case if it wants to stop it. Requests for additional information extend the deadline to 20 days after company response to the requests.

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Both American and Delta officials said they were putting together responses to several broad questions that the department is asking about the merger.

James Lundy, Delta spokesman, said the companies still hope to meet the May 1 date for setting up the new reservations company. No name has yet been selected for the partnership, he said.

Critics of the merger include some other airlines, state attorneys general and consumer advocates. They say it will further reduce competition among the dwindling number of major carriers.

They say travel agents subscribing to a system tend to book passengers on airlines that own that system. Only larger travel agents generally have more than one reservations system.

Delta is to pay American $650 million for a 50% share in the new company. U.S. airlines without ownership in another U.S. reservations system will be allowed to buy shares at $20 million for a 1% interest. Other domestic and foreign carriers, as well as other travel-related companies may buy in with approval of existing owners, but Delta and American will each retain at least a 25% share.

American spokeswoman Karen Cook said, “We are still very optimistic” that the merger can take place on May 1.

She said the company believes that the merger will create an enhanced reservations system that will encourage, rather than reduce, competition in commercial aviation.


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