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USAIR CHAIRMAN BLAMES EXCESSIVE CAPACITY FOR INDUSTRY PROBLEMS

 ARLINGTON, Va., Feb. 17 /PRNewswire/ -- Attempts by the three largest airlines -- American, Delta and United -- to "take over the market by adding massive numbers of new planes to their fleets has caused the financial situation in which the industry, including the Big Three, now finds itself," USAir Chairman, President and CEO Seth E. Schofield testified today before the Aviation Subcommittee of the Committee on Public Works and Transportation in Washington.
 Schofield added: "This is the reason that those who are the most outspoken about why we now need an outside force such as the government to protect this industry from itself are the same people who do not wish to admit that the problems are perhaps self- inflicted."
 Schofield also testified that " ... the government should not overreact to the airline industry's current financial problems. The main problem -- excess capacity -- is correcting itself as a result of management's actions in response to market forces.
 "The government's role is to ensure that the policy objectives of the Airline Deregulation Act are carried out. Paramount among those statutory objectives are to promote competition, avoid undue industry concentration and encourage access to capital by well-managed airlines. If there is to be any government policy guidance from these hearings, it should be a renewed commitment to these objectives."
 USAir and other carriers, Schofield said, are looking for solutions to industry problems that do not involve government intervention " ... but to interrupt the process of domination by the Big Three. We believe in competition. We believe that there should be more choices for the consumer than just three airlines."
 On the issue of excess capacity, Schofield noted that American, Delta and United increased their total capacity by 35 percent during the past three years, despite a recessionary economy, while the remainder of the industry was growing at a 10 percent rate. Internationally, the Big Three grew by 136 percent over the same period, which compares with a 16 percent international growth rate for the rest of the U.S. industry.
 The Big Three took delivery of 500 aircraft from 1990-1992, or, collectively, one new airplane every other day for the last three years, Schofield noted.
 Schofield was also critical of Big Three opposition to the formation of international airline alliances, calling it an issue that " ... has become clouded with rhetoric and misinformation."
 Instead, Schofield said, "These alliances should be welcomed by the federal government as an important means of promoting competition in the domestic airline industry. It is no accident that the only opponents of these alliances are the Big Three."
 Complaints by the Big Three that they are disadvantaged by existing trade agreements, such as the Bermuda II treaty between the United States and the United Kingdom, ring hollow, Schofield said, when it is noted that, combined, the three airlines fly 94 percent of all U.S.-Europe traffic.
 -0- 2/17/93
 /CONTACT: USAir Corporate Communications, 703-418-5100/
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CO: USAir ST: District of Columbia IN: AIR SU:

DC -- DC023 -- 7409 02/17/93 14:22 EST
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Publication:PR Newswire
Date:Feb 17, 1993
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