Airlines Won't Miss Rep. Oberstar
By Ted Reed 11/05/10 - 08:00 AM EDT
WASHINGTON (TheStreet) -- Please excuse the airline industry for applauding Rep. James Oberstar's (D., Minn) departure from Congress.
UPAs chairman of the House Transportation Committee, the 18-term Minnesota congressman was perhaps the industry's most prominent critic. He was also among the many veteran Democratic legislators who succumbed to the anti-insurgent tide on Tuesday, when he was narrowly defeated by a former Northwest pilot.
Oberstar's approach to the industry he oversaw was on view at a July hearing on the then-proposed merger between United(UAL_) and Continental. He called the merger "a terrible, awful no-good thing" and declared that airlines "work night and day trying to figure out how to squeeze more money out of this turnip they've got in their hand.
James Oberstar (D., Minn), Chairman of the House Transportation Committee
"I'm determined that won't happen," he said.
Earlier, Oberstar opposed the 2008 merger between Delta(DAL_) and Northwest. Also, more than any other person, Oberstar was responsible for the enhanced maintenance oversight that led to the 2008 cancellation of 3,000 American (AMR_) flights, a move that inconvenienced hundreds of thousands of passengers and was widely viewed as unnecessary.
"I don't think there will be a lot of tears shed in airline executive suites" over Oberstar's departure, Fairfax, Va.-based industry consultant George Hamlin said Thursday.
But Hamlin noted that many of Oberstar's battles were unsuccessful. Oberstar opposed mergers, yet the past five years have seen four major mergers, marking the most intense consolidation in industry history. Oberstar opposed airline fees, yet they now annually produce billions of dollars and have been a major factor in enabling profits for an industry that historically loses money. Oberstar advocated industry re-regulation, which to most observers seemed far-fetched.
Oberstar "held his positions passionately and was consistent about them," Hamlin said. "But we've had consolidation, both at the tail end of the Bush administration and into the Obama administration, on a fairly large scale.
"He was a friend of labor, and that placed him at odds with management," Hamlin said.
Recently, Oberstar was the principal advocate for placing FedEx(FDX_) under the National Labor Relations Act, which would have made it easier to unionize the company.
FedEx fought back with an extensive lobbying campaign. "We look forward to a more constructive relationship with the [transportation] committee going forward," said FedEx spokesman Maury Lane.
In a report issued Thursday, CRT Capital Group analyst Mike Derchin called Oberstar's pending departure "a surprise development that has positive implications for the airline industry.
"Rep. Oberstar ran the Transportation Committee like a fiefdom and used his influence to try to 1) block mergers;
2) limit foreign ownership of U.S. airlines;
3) end global alliances with antitrust immunity;
4) restrict maintenance outsourcing overseas and 5) facilitate unionization of FedEx," Derchin wrote.
"Oberstar viewed himself as a friend of labor and the consumer," he said. "But by pushing legislation that would raise airline costs and reduce airline revenues, his actions had the opposite effect on labor and the consumer. "
Oberstar's departure could enable more rapid passage of industry-friendly legislation, because various contentious provisions will be removed, Derchin said. Pending legislation could enable implementation of a next-generation air traffic control system and legally-protected voluntary safety programs.