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Mike Boyd On Merger Mania  
User currently offlineLawnDart From United States of America, joined May 2005, 968 posts, RR: 3
Posted (7 years 3 months 1 week 3 days 5 hours ago) and read 3118 times:

From Aviationplanning.com (fair use excerpt):

Finally...
More Merger Fun

Mantra. Chant something over and over again, and some folks believe it'll become reality. Even if it has no basis in fact or possibility.

That's what's coming from folks of the pro-merger persuasion. Lots of them have assumed the Lotus Position and are intoning various babblings about how the hostile take over of Delta will bring peace and order to the cosmos, if not the airline industry.

It's about all they have to go on.

Let's All Chant Together: LCCs Are Coming. LCCs Are Coming. The number one emerging mantra from the usual sources of un-informed airline lore is that in the event of a US take over of DL, it will result in a land office business expansion for low-fare carriers. There'll be gazillions of new markets to enter, and that'll keep fares low for everybody.

And the Easter Bunny just joined the Teamsters, too.

This LCC claim is typically made by "analysts" who apparently get most of their analytical data from reading the newspapers or maybe from inhalation of controlled substances. It certainly couldn't be from an understanding of the airline industry itself.

The mantra is short and sweet. It goes something like this: the combined US/DL system will leave huge opportunities for those ever-expanding LCCs. Period.

Sorry, no further data available. No specifics. Just accept it as gospel.
And if you question it, well, you're simply not with the program. Just hum a few bars, say it over and over again, and you will shape reality.

Unfortunately, it's a load of baloney. The truth is that the only markets where there will be any significant capacity reductions will be at mid-size airports where the combined DL/US operations will still dominate, offering no real opening for LCCs.

One of the silliest parts of the mantra is that some communities will have the wonderous availability of LCC service within a 100 mile radius. Goody, they seem to be predicting the merger will cause even more traffic leakage for smaller airports.

What the mantra leaves out is that most of these LCCs themselves are facing real challenges - increasing costs, increasing competition, and a lot of new expensive lift coming on line, all dressed up and often with no clear place to go. Rushing in to save consumers at Charlottesville isn't in the cards.

Airline Knowledge Need Not Apply. Neither Does Reality. Some of the "expertise" coming out from under industry rocks could make for an episode of the Gong Show.

One "analyst" last week proclaimed that consolidation is necessary by virtue of the "fact" that there are over 100 airlines flying in the US, (say what?) and that number must be reduced to six or seven. (?) Not only that, the experience at Pittsburgh was a poster child for consolidation, because now, US Airways doesn't have a hub there that dominates the market. (Leaving out, of course, the concurrent loss of dozens of nonstop destinations and virtually all international service - something the local Western Pennsylvania business community is no doubt thrilled about.)

The same guy concluded by stating that the government must assure that no airline has more than 30% of a given airport's traffic. (Which means no hubs, and that they'll have to force another three airlines into places like Latrobe, to assure the 30% cap is not exceeded. Truly brilliant thinking.)

We have another two weeks until the US Airways' February 1 take-it-or-I'm-gonna-take-my-toys-and-go-home ultimatum arrives. Do plan on lots more twists and turns.

Not to mention more entertainment from the outlying planet systems of the aviation analyst galaxy.


(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

18 replies: All unread, jump to last
 
User currently offlineEmSeeEye From United States of America, joined Jun 2006, 508 posts, RR: 0
Reply 1, posted (7 years 3 months 1 week 3 days 4 hours ago) and read 3071 times:

So whats his point? LCC consolidation leaves a reduction in seats, little room for LCC expansion in some airports, analysts are smoking crack or that he doesn't care for a particular analysis he read?

I have said it once and I will say it again. Mike Boyd is nauseating. His writing style (if hes the one that writes it) is like a 9th grader with ADD. He needs to hire a (competent) editor and be a little more professional in his writing style.

Just my 2 cents...


User currently offlineAvConsultant From United States of America, joined Feb 2006, 1360 posts, RR: 3
Reply 2, posted (7 years 3 months 1 week 3 days 4 hours ago) and read 3046 times:

Quoting EmSeeEye (Reply 1):
have said it once and I will say it again. Mike Boyd is nauseating. His writing style (if hes the one that writes it) is like a 9th grader with ADD. He needs to hire a (competent) editor and be a little more professional in his writing style.

Just my 2 cents...

I agree and his ideas have always been way off. Remember in 1994 when the RJ's were going to put the regionals out of buisness. I dumped my F'n OH stock b/c of his advice.

Yes, I'm bitter.


User currently offlineSurfdog75 From United States of America, joined Nov 2005, 326 posts, RR: 0
Reply 3, posted (7 years 3 months 1 week 3 days 4 hours ago) and read 2997 times:

Quoting AvConsultant (Reply 2):
I agree and his ideas have always been way off. Remember in 1994 when the RJ's were going to put the regionals out of buisness. I dumped my F'n OH stock b/c of his advice.

Yes, I'm bitter.

He's right on this though. The need for consolidation is a myth. Passenger traffic will increase dramatically over the next decade. Capacity has already been brought down by market forces and the BK of many carriers. Consolidation is the mantra pushed by those that stand to make a fortune off of it; banks, hedge funds, high level management, and the analysts that represent them.

[Edited 2007-01-15 17:45:20]

User currently offlineDoug_Or From United States of America, joined Mar 2000, 3381 posts, RR: 3
Reply 4, posted (7 years 3 months 1 week 3 days 4 hours ago) and read 2986 times:

Quoting AvConsultant (Reply 2):
Yes, I'm bitter.

Well you're certainly something... (not sure if bitter was my choice of words)



When in doubt, one B pump off
User currently offlineAirBuffalo From United States of America, joined Jan 2004, 138 posts, RR: 0
Reply 5, posted (7 years 3 months 1 week 3 days 3 hours ago) and read 2831 times:

Quoting EmSeeEye (Reply 1):
He needs to hire a (competent) editor and be a little more professional in his writing style

I completely agree. I can't imagine that anyone "ACTUALLY" in the industry (as opposed to us wanna-bees here at a.net!) takes him seriously after reading such sophomoric dribble. Regardless of whether he had a legitimate point, he surrounds it with such unprofessional ranting that he loses most of his credibility to me.

For a professional "blog", I think Randy from Boeing has captured the appropriate style and voice. Whether or not you agree with him, he does present a clear arguement in an appropriately professional tone.

http://www.boeing.com/randy/

bS


User currently offlineLowrider From United States of America, joined Jun 2004, 3220 posts, RR: 10
Reply 6, posted (7 years 3 months 1 week 3 days ago) and read 2682 times:

Quoting EmSeeEye (Reply 1):
Mike Boyd is nauseating.

Maybe, but his is not always wrong, either. His "Survivor: RJ" series ended up being pretty accurate. I don't think a UsAir/Delta merger or a Delta/Northwest merger would many opportunites for LCCs, but I do think it would help the industry overall. The real losers would be any company that provides a contracted service to either or both of the mainlines.



Proud OOTSK member
User currently offlineEmSeeEye From United States of America, joined Jun 2006, 508 posts, RR: 0
Reply 7, posted (7 years 3 months 1 week 2 days 23 hours ago) and read 2599 times:

Quoting Lowrider (Reply 6):
Maybe, but his is not always wrong, either.

I never said he was wrong. I'm just stating that for someone who is so sought after in the airline / aviation community he comes across as immature and very unprofessional in his writing.

Can you imagine any airline executive writing an OP ED piece calling an analyst (whom they probably never met) a crack pipe smoker?


User currently offlineAirBuffalo From United States of America, joined Jan 2004, 138 posts, RR: 0
Reply 8, posted (7 years 3 months 1 week 2 days 23 hours ago) and read 2561 times:

Quoting EmSeeEye (Reply 7):
so sought after in the airline / aviation community

I wouldn't go that far ... there's A LOT of self-promotion that surrounds his company (as is the case for any small business trying to make a reputation, to be fair).

After all that Boyd-bashing, I must say that I agree with him! Most legacies are experiencing near-record load factors, have reduced ASM over 2000-2001, and are beginning to return to profitablity (albeit at employees' expense in some cases). This proves that industry can adjust to the supposed "overcapacity" just fine without mega-mergers.

"Overcapacity" is simply an industry code word for "unwanted competition".

From first hand experience, I can say that analysis of the Western PA situation is spot on -- we never had $120 rt fares to BOS or MDW in the USAirways hub days like we do now. However, we DID have nonstop flights to just about any city in the northeast we could want. Can't have it both ways in a city of the size and demographics of greater Pittsburgh (Latrobe included)...


User currently onlineLufthansa From Christmas Island, joined May 1999, 3197 posts, RR: 10
Reply 9, posted (7 years 3 months 1 week 2 days 21 hours ago) and read 2389 times:

Quoting AirBuffalo (Reply 8):
After all that Boyd-bashing, I must say that I agree with him! Most legacies are experiencing near-record load factors, have reduced ASM over 2000-2001

This says absolutely nothing about yeild. Margins.. how much am I actually making on each seat? In just about any set of market conditions, if the price is set right, you should be able to see 'near record load factors'. that price could be barely makig a profit, or even worse, a loss.

What i don't get is this huge contradition by boyd in that he has long said "out with the RJ's"... and industry consolidation would be one effective way of doing that. Removing mulitple RJ flights and replacing them with either the SAME seat capacity or a slightly reduced one, reduce overall flying costs, and Mr Boyd must know that if he claims to know anything at all about the cost of operating an aircraft. And that is all it comes down to. It costs "$a" to produce and I can sell it for "$b".... its really really simple.
Sometimes I wonder if this man is on some kind of crazy ego trip?


User currently offlineLawnDart From United States of America, joined May 2005, 968 posts, RR: 3
Reply 10, posted (7 years 3 months 1 week 2 days 16 hours ago) and read 2205 times:

Quoting EmSeeEye (Reply 7):
Can you imagine any airline executive writing an OP ED piece calling an analyst (whom they probably never met) a crack pipe smoker?

Who was it that Colleen Barrett, president of Southwest Airlines, said was smoking crack? Oh, that's right...Doug Parker!

By the way, did you all see Southwest's new website? When did that happen?


User currently offlineEssentialPowr From United States of America, joined Sep 2000, 1820 posts, RR: 2
Reply 11, posted (7 years 3 months 1 week 2 days 16 hours ago) and read 2198 times:

Expressjet is buying Delta...

User currently offlineCkfred From United States of America, joined Apr 2001, 5069 posts, RR: 1
Reply 12, posted (7 years 3 months 1 week 2 days 15 hours ago) and read 2135 times:

I saw the analyst, as well as Mike Boyd, on CNBC last week. Mike has a point. US/DL would have something like 70% of the traffic at CHS. No one, legacy or LCC, is about to come into CHS and set up a large operation to compete.

The LCCs want to go into large hubs that have a legacy carrier and start picking off the good routes, such as B6 going into ORD to pick off AA and UA traffic to LGA/EWR and LAX/SNA.

Frankly, Mike's writing style doesn't bother me. It's far more entertaining than reports written by the Wall Street types. The only CEO whose letter to shareholders that is fun to read is Warren Buffet.


User currently offlinePVG From Hong Kong, joined Dec 2004, 722 posts, RR: 2
Reply 13, posted (7 years 3 months 1 week 2 days 5 hours ago) and read 1980 times:

Quoting EmSeeEye (Reply 1):
I have said it once and I will say it again. Mike Boyd is nauseating. His writing style (if hes the one that writes it) is like a 9th grader with ADD. He needs to hire a (competent) editor and be a little more professional in his writing style.

Agree. He lost me a few years ago when he wrote something about "IF" oil wasn't $50/barrel that the airlines would be profitable. "IF",is something you can't control. What it meant was that the airlines had no pricing power at the time. They cut capacity and finally have some ability to raise fares to meet their costs and put some money in their pockets.

Actually, from his writing style I thought that he was a young guy. I saw him on TV the other day, he must be pushing 60.

Quoting AirBuffalo (Reply 8):
After all that Boyd-bashing, I must say that I agree with him! Most legacies are experiencing near-record load factors, have reduced ASM over 2000-2001, and are beginning to return to profitablity (albeit at employees' expense in some cases). This proves that industry can adjust to the supposed "overcapacity" just fine without mega-mergers.

There was a snow storm in Denver for 2 days that cost UA $40 mil and put them in the red for Q4. I think that alot of people are jumping the gun on airline profitablity. They lose billions over a 4-5 year period, and finally are able to turn small/reasonable profits and suddenly the industry is back on it's feet? As we see from the Denver storm, a small hiccup and the profits disappear. The industry needs to be profitable enough to sustain small hiccups, pay decent wages and benefits, and sustain profits on a long-term basis. I think that consolidation is the way to go. There really is no need for the US to have 15 or so airlines.


User currently offlineEmSeeEye From United States of America, joined Jun 2006, 508 posts, RR: 0
Reply 14, posted (7 years 3 months 1 week 2 days 1 hour ago) and read 1864 times:

Quoting LawnDart (Reply 10):
Who was it that Colleen Barrett, president of Southwest Airlines, said was smoking crack? Oh, that's right...Doug Parker!

Really? Do you have a quote? I would love to see that one.


User currently offlineBoeing7E7 From , joined Dec 1969, posts, RR:
Reply 15, posted (7 years 3 months 1 week 2 days 1 hour ago) and read 1799 times:

Quoting EmSeeEye (Reply 1):
I have said it once and I will say it again. Mike Boyd is nauseating. His writing style (if hes the one that writes it) is like a 9th grader with ADD. He needs to hire a (competent) editor and be a little more professional in his writing style.

I'd rather see his more relaxed and to the point writing style than I would direct incompitence in content.

Quoting AvConsultant (Reply 2):
I agree and his ideas have always been way off. Remember in 1994 when the RJ's were going to put the regionals out of buisness. I dumped my F'n OH stock b/c of his advice.

Yes, I'm bitter.

A stock rocket that was short lived? And you're bitter? He was spot on.

[Edited 2007-01-16 21:14:49]

User currently offlineEssentialPowr From United States of America, joined Sep 2000, 1820 posts, RR: 2
Reply 16, posted (7 years 3 months 1 week 1 day 19 hours ago) and read 1673 times:

Delta is buying ExpressJet?

User currently offlineLawnDart From United States of America, joined May 2005, 968 posts, RR: 3
Reply 17, posted (7 years 3 months 1 week 1 day 15 hours ago) and read 1532 times:

Quoting EmSeeEye (Reply 14):
Really? Do you have a quote? I would love to see that one.

Okay, crack may not have been the drug of choice, but from Post-Gazette.com Friday, May 20, 2005...(This is in regard to the HP buyout of US):

Southwest executives have raised doubts about the merger in recent weeks, with Southwest President Colleen Barrett saying that Parker and Lakefield "must be on drugs. I think they're crazy. I don't know why anybody in today's environment would want to add more woes to what they got."


User currently offlineEmSeeEye From United States of America, joined Jun 2006, 508 posts, RR: 0
Reply 18, posted (7 years 3 months 1 week 1 day 5 hours ago) and read 1436 times:

Quoting LawnDart (Reply 17):
Southwest executives have raised doubts about the merger in recent weeks, with Southwest President Colleen Barrett saying that Parker and Lakefield "must be on drugs. I think they're crazy. I don't know why anybody in today's environment would want to add more woes to what they got."

Can anyone other than Parker disagree with her?


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