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USAIR ATTACKS POSITION OF BIG THREE

 ARLINGTON, Va., Feb. 5 /PRNewswire/ -- The following letter from USAir Chairman, President and CEO Seth E. Schofield was delivered today to U.S. Secretary of Transportation Federico F. Pena.
 Schofield points out that a demand by the Big Three airlines for a time-consuming policy study of foreign investment in U.S. carriers is nothing but a ploy to avoid competition in domestic and international markets that they already dominate.
 "Rather than lash out at foreign investment, which is what the Big Three want the Clinton administration to do," Schofield told Pena, "you should ask the Big Three why they continued to increase their capacity and the associated costs of that capacity during the recession. Ask the Big Three to look at themselves, because if they do, they will find the source of many of the airline industry's current difficulties."
 The text of the letter to Pena from Schofield follows:
 The chief executive officers of the Big Three airlines wrote you a letter on Feb. 3, in which they object to the revised USAir-British Airways agreement and our code-sharing arrangement. The Big Three want the Clinton administration -- in their words -- to "formulate an international aviation policy that addresses the broad question of how foreign investment in the U.S. airline industry will affect the long-term capabilities of U.S. and foreign airlines in all markets." In other words, they want you to sit on the code-sharing arrangement until you have studied and devised a new grand scheme for worldwide aviation.
 I assume you can see this ploy for what it is. It is a common practice in Washington for dominant firms to try to hold back competition by asking the federal government to run interference for them by conducting lengthy investigations and studying new "policies." You're being used as a delaying tactic.
 The Big Three airlines already carry nearly 60 percent of the nation's air travelers both within this country and between this country and foreign nations. They are the first, second and fourth ranking airlines across the North Atlantic. They just do not want anyone else to have a chance to become a competitive threat to their dominance. That is what their joint public relations and lobbying campaign is all about.
 The revised USAir-British Airways transaction is straight-forward and complies with this country's laws and treaty obligations. The initial $300 million investment is passive and meets all statutory standards. Any future governance by British Airways through the second and third option investments rests entirely within the department's control. The code-sharing arrangement is fully authorized by the bilateral agreement between the United States and the United Kingdom. Your professional staff will confirm for you that the code-sharing provisions in the bilateral agreement were negotiated by the two countries in exchange for allowing American and United to serve Heathrow airport. Having gotten their side of the deal, American and United now want the United States to break its treaty obligations.
 The United States international aviation policy has been a huge success for the Big Three. As I noted earlier, these three airlines carry 60 percent of the international traffic to and from this country. Between the United States and the United Kingdom, the Big Three and other U.S. airlines operate 57 percent of the flights against British Airways' 33 percent. These are not the signs of a failed U.S. policy.
 Our international aviation policy can become even more successful if we continue to press for competitive opportunities through negotiation. We support these efforts. However, our objectives will not be met by breaking treaty obligations. If you bow to the lobbying onslaught of the Big Three, you will be sending a signal to the international community that the United States does not keep its word. The repercussions from that signal would extend beyond aviation and invite retaliation.
 The airline industry's financial problems cannot be underestimated, but those problems will not be solved through protectionist acts -- especially acts that violate our international agreements. Rather than lash out at foreign investment, which is what the Big Three want the Clinton administration to do, you should ask the Big Three why they continued to increase their capacity and the associated costs of that capacity during the recession. Ask the Big Three to look at themselves, because if they do, they will find the source of many of the airline industry's current difficulties.
 /delval/
 -0- 2/5/93
 /CONTACT: USAir Corporate Communications, 703-418-5100 or 310-417-1294 (Western Region)/
 (U BAB)


CO: USAir; U.S. Department of Transportation; British Airways ST: Virginia IN: AIR SU:

KD -- DC023 -- 3609 02/05/93 14:49 EST
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Date:Feb 5, 1993
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