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News On The UAL-US Merger. Comments?  
User currently offlineUnited Airline From Hong Kong, joined Jan 2001, 9181 posts, RR: 15
Posted (13 years 6 months 2 weeks 1 day 12 hours ago) and read 2416 times:

UNITED, US AIRWAYS AND THE DEPARTMENT OF JUSTICE SIGN OFF ON EXTENSION OF MERGER REVIEW PERIOD

March 06, 2001

FOR IMMEDIATE RELEASE


(CHICAGO), March 6, 2001 ?UAL Corp., the parent of United Airlines (NYSE:UAL) and US Airways Group, Inc., have agreed to extend beyond April 2 the period for completing their merger to allow the Department of Justice (DOJ) further time for review of materials. The parties will be submitting additional materials in response to a March 2 DOJ request for information regarding the United-American transaction. The parties have agreed to a 21-day notification to DOJ prior to closing their proposed transaction so as to allow for review of the information related to the agreement with American.

Since it has been only a matter of weeks since United announced its agreement with American, this gives the DOJ time to study the documents it has requested related to this new element of the proposed merger with US Airways.

United will continue working cooperatively with the DOJ throughout this process.

- UAL -



Any comment on this? I am sure the merger will go through. What do you guys think?

15 replies: All unread, jump to last
 
User currently offlineN628AU From United States of America, joined Oct 2000, 343 posts, RR: 0
Reply 1, posted (13 years 6 months 2 weeks 1 day 12 hours ago) and read 2342 times:

Number 1...it is old news now (look at the press release date).

Number 2...this cannot be good news for those that want it to occur.


User currently offlineN628AU From United States of America, joined Oct 2000, 343 posts, RR: 0
Reply 2, posted (13 years 6 months 2 weeks 1 day 12 hours ago) and read 2336 times:

Anyway, why are you sure it will occur?

User currently offlineCPDC10-30 From United Kingdom, joined Feb 2000, 4785 posts, RR: 23
Reply 3, posted (13 years 6 months 2 weeks 1 day 12 hours ago) and read 2334 times:

What is so special about the news release? It is over two weeks old and just says that the merger will be reviewed longer.

User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4506 posts, RR: 34
Reply 4, posted (13 years 6 months 2 weeks 1 day 8 hours ago) and read 2333 times:

This announcement is very old news. It does not bode well for the merger. DOJ sources said at the time that DOJ was unhappy with combined UA-AA dominance at LGA, DCA, and BOS. And--in vindication of my longtime complaints about the merger's potential devastating effects on Upstate New York--DOJ sources said that Justice is specifically concerned about that region.

This merger is anti-competitive and anti-consumer. More recent news is Steve Wolf's crocodile-tears testimony to the Senate yesterday that cash-flush US Airways is going to go bankrupt soon if the merger isn't approved. What rot. US has 8-10 years before its untenable costs bring it down. Wolf should be forced to eat a bowl of manure for every shovelful he dishes out to the media and Congress. He might start telling the truth if that were the case.

No merger!

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineAirwaysdc9 From United States of America, joined May 1999, 204 posts, RR: 3
Reply 5, posted (13 years 6 months 2 weeks 1 day 7 hours ago) and read 2326 times:

Jim and I have had argument after argument regarding the merits of this merger. I dont believe that in his recent testimony Mr. Wolf said "when" US Airways would succumb to bankruptsy, he simply implied that it is inevitable. (Jim's 8 to 10 year prediction may be accurate...nobody knows)

Here are the sad facts.
1. US Airways grew into the major airline that it is based on extremely high yields in the northeast United states. Despite high costs due to diverse fleet types, inefficiencies in union contracts, short stage lengths, etc.. the yields earned in the northeast were the highest in the industry.

2. Over time low fare carriers such as Southwest, AirTran, Jetblue etc. made inroads into the northeast. Yields began to decrease as these low fare carriers sifted away that profitable traffic that made US Airways what it is today.

3. Regional Jets appeared in the marketplace. Network competitors such as American, Delta, and Continental used RJ's to sift high yield business travelers away from US Airways and in to their more comprehensive route systems.

4. US Airways costs remain the highest in the industry despite recent "parity" of labor contracts, and the beginning of the transfer to the all-Airbus fleet. Stage legnths remain short and high cost.

5. In order to lower costs US Airways would need to expand with more long haul flying. To do so would mean not only significant spending on new equipment, hiring, infrastructure etc...but it would also mean years of losses as US Airways attempts to "steal" marketshare from established carriers. (Ask any Californian who US Airways is and they'll likely ask, "Who?") US Airways is currently losing a million dollars each day. They dont have the money to expand this way, ESPECIALLY in the declining economy when most network carriers are beginning cost cutting measures.

6. Stephen Wolf in his recent testimony told the media that if the merger did not take place he would be forced to drastically reduce the size of US Airways and lay off workers. There is no room in the industry for a mid-size carrier with a mature cost structure.

7. According to the history in the book, "Hard Landings", Mr. Wolf does not lie. He speaks the truth - even if the truth isnt quite what we want to hear.

The United Merger may not take place. If it does not, I would not be surprised to see radical changes at US Airways. Changes that may well result in the shift of the balance of power in the northeast. This may not effect Jim, or others in the larger cities. Someone will serve those markets. Low fare carriers will continue their expansion. Network carriers, once the market recovers, will continue their expansion as well.

The inevitable failure of US Airways will instantly impact the 46,000+ US Airways employees...that impact will come in the form of layoffs and low moral. Indirectly that will effect the consumer.

The inevitable failure of US Airways will instantly impact the tens of thousands of employees at the 10 US Airways Express carriers and contract carriers.

The inevitable failure of US Airways will instantly impact the hundreds of thousands of customers that US Airways has served with dedication for over 30 years.
Johnstown, PA, Jamestown, NY, Ithaca NY, Elmira, NY, Altoona, PA, Lancaster, PA, Franklin, PA...and hundreds more like them.

The inevitable failure of US Airways will almost instantly impact the hundreds of employees of collateral businesses that rely upon US Airways maintaining a hub presence to support their own businesses. In Pittsburgh, Charlotte, Philadelphia...bus drivers, taxi drivers, parking lot attendants, fuelers, cleaners, hotel employees, restaurant employees, gas station attendants, teachers, church officials, K mart employees....the people of the communities that rely upon US Airways. The US Airways that will not simply click "OFF" like a light switch one day and have jobs restored by another carrier the next day....but the US Airways that will languish over the years with layoffs, job actions, cutbacks. Shall we watch our communities die before our eyes? The Pittsburgh Post Gazette reported in 2000 (prior to the F/A strike) that if US Airways were to go out of business, the economic impact upon Pittsburgh would be greater than that caused by the closure of the steel mills. That can not be repaired overnight.

No, the consumer will not notice much change should US Airways slowly die and be replaced. If people need to fly, someone will be there to fly them. But the men and women who have dedicated their lives to this airline will notice.

The major carriers to not compete in price today. After consolidation there will be no change in that unspoken policy. The industry relies on vibrant low-fare carriers to force price competition. And thanks to financially strong carriers such as AirTran, Southwest, Jetblue, Vanguard, Frontier, Midway, ATA, National, and DC-Air....that competition will exist. The citizens of this great nation will enjoy the safest, most comprehensive air travel network on the planet...and still get those $39.00 tickets to Orlando.

I like Jim a lot and I respect his opinion. He and I are total opposites. I rely on this industry, and in fact on US Airways to support my family, my friends, and my community. Jim speaks for the angry consumer that has been mistreated since deregulation.

I believe that the merger should occur and that the consumers will not be any worse off. If it does not, however, I believe that it is time for the airlines to be re-regulated...obviously congress feels they can run a private industry better than that industry can istelf...let them give it a try.

-Mike


User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4506 posts, RR: 34
Reply 6, posted (13 years 6 months 2 weeks 1 day 6 hours ago) and read 2308 times:

Indeed AirwaysDC9 and I have had many arguments about the merits of the merger. He speaks for the hardworking airline employee, upon whose back the industry's high profits of the late '90s were made, and with whom they were not shared. Of the various defenders of UA-US out there, he offers the most intelligent and honest arguments in favor of the merger.

It does not seem to me, though, that the dire effects he predicts for small markets--the Jamestowns and Altoonas that won't get JetBlue--will come true. Nor will disruptions at US Airways hub cities be as lengthy or as severe has he suggests. These are legitimate concerns that need to be addressed, as much as long-term consumer concerns, in considering the UA-UA-US merger.

First and foremost, however, the merger is not going to happen because it would make UA too big. Ten years of pent up public ill-will towards the airlines who used their 1980's consolidation to enrich themselves and oppress communities, is not going away. DOJ and Congress do not and should not trust Big Air with more consolidation. United would have 27.2 percent of the market with US' 6 percent added, and that is too big. AA-TW gives AA 22.6 percent, a hair bigger than UA's current 22.2 percent. So it by itself does not trigger superconsolidation.

IF US is going to merge, it will have to be with someone smaller. Say Northwest (whose service record is as deplorable as United's but there it is).

In response to AirwaysDC9's arguments:

A.: Here are the sad facts.
1. US Airways grew into the major airline that it is based on extremely high yields in the northeast United states. Despite high costs due to diverse fleet types, inefficiencies in union contracts, short stage lengths, etc.. the yields earned in the northeast were the highest in the industry.

J.: The failure of 10 years of US chairmen--Colodny, Wolf, Gangwal--to rationalize the fleet and streamline contracts, does not justify making a SuperBig 3. The possibility of the loss of all low-fare carriers simply does not justify turning the industry and cities' air service on its head to rectify these failures.

A.: 2. Over time low fare carriers such as Southwest, AirTran, Jetblue etc. made inroads into the northeast. Yields began to decrease as these low fare carriers sifted away that profitable traffic that made US Airways what it is today.

J.: These carriers cannot expand quickly enough to establish reasonable fares, and overcome a SuperUnited in Upstate New York. UA would have 58 percent at Rochester and Syracuse, which is on-its-face antitrust unacceptable. Rochester is so close to BUF that we might never get WN or AirTran. Unjust and unfair in my mind, given Rochester's economic strength compared to dying Buffalo, but there it is. The low-fare renaissance is happening unevenly, and it should not be relied upon by itself to establish airfare and service justice on its own in Upstate New York.

A.: 3. Regional Jets appeared in the marketplace. Network competitors such as American, Delta, and Continental used RJ's to sift high yield business travelers away from US Airways and in to their more comprehensive route systems.

J.: This argument is not borne out in Rochester or Syracuse. The RJ's introduced there all replace existing turboprop service, and in most cases represent no additional capacity (Continental Express replaced 6 ATR-42's to EWR with 4 ERJ 50's--no additonal capacity, and thus no drain from US Airways, there). AA replaced longstanding SF3s to LGA with similarly-sized ERJ-135's. At ROC and SYR, there has been no net "RJ drain" of higher-fare business travelers from US to DL, CO, or AA.

A.: 4. US Airways costs remain the highest in the industry despite recent "parity" of labor contracts, and the beginning of the transfer to the all-Airbus fleet. Stage legnths remain short and high cost.

J.: See response to argument 1.

A.: 5. In order to lower costs US Airways would need to expand with more long haul flying. To do so would mean not only significant spending on new equipment, hiring, infrastructure etc...but it would also mean years of losses as US Airways attempts to "steal" marketshare from established carriers. (Ask any Californian who US Airways is and they'll likely ask, "Who?") US Airways is currently losing a million dollars each day. They dont have the money to expand this way, ESPECIALLY in the declining economy when most network carriers are beginning cost cutting measures.

J.: I just don't believe that US is losing a million dollars a day. Wolf pays the accountants, and at ROC and SYR at least traffic distribution has remained similar as have traffic levels--and high fares. Word has it that all US marketing must now be approved through UA HQ. UA HQ wants the merger. I don't believe that US is advertising aggressively, and they have not expanded MetroJet to meet the WN challenge at Albany and Buffalo. Wolf is subtly--not to blatantly, which laymen could see--managing US into the ground with UA cooperation. A330s to Europe provide high-fare revenue and distract attention from the fact that US is not aggressively pushing itself in the US. Despite the increasing pax loads and a/c numbers that haven't eased off.

A.: 6. Stephen Wolf in his recent testimony told the media that if the merger did not take place he would be forced to drastically reduce the size of US Airways and lay off workers. There is no room in the industry for a mid-size carrier with a mature cost structure.

J.: This threat--an about-face from January when W. and Gangwal were telling Congress that you can't shrink an airline to profitability--is more "managing the carrier into the ground."

A.: 7. According to the history in the book, "Hard Landings", Mr. Wolf does not lie. He speaks the truth - even if the truth isnt quite what we want to hear.

J.: Even truth tellers often emphasize what they want people to believe, and Wolf is crying bankruptcy--even if he's not saying when. Calling the merger "vital" in 2001 is overstatement.

A.: The United Merger may not take place. If it does not, I would not be surprised to see radical changes at US Airways. Changes that may well result in the shift of the balance of power in the northeast. This may not effect Jim, or others in the larger cities. Someone will serve those markets. Low fare carriers will continue their expansion. Network carriers, once the market recovers, will continue their expansion as well.

J.: As I said, the low-fare renaissance is spreading unevenly in the Northeast. Buffalo and Albany have been anointed by Uncle Herb--no telling how long it'll be before WN gets to ROC and SYR, or if at all. It is unjust that such healthy midsize markets should have to drive to their neighbors for reasonable fares. The majors have decided that getting low fares forced out of them by WN at its anointed cities is the only alternative to high fares everywhere else. The Big 6/ Oligopoly carriers will indeed expand--probably with smaller a/c and higher fares--to replace US after its eventual demise.

A.: The inevitable failure of US Airways will instantly impact the 46,000+ US Airways employees...that impact will come in the form of layoffs and low moral. Indirectly that will effect the consumer.

J.: IT is always tragic for employees in the short term when a company fails. But responsibility ultimately rests at the feet of their executives who made bad decisions. The government can't rescue everyone from that failure all the time. TW didn't have time, US does. SuperUnited is not an option.

A.: The inevitable failure of US Airways will instantly impact the tens of thousands of employees at the 10 US Airways Express carriers and contract carriers.
Johnstown, PA, Jamestown, NY, Ithaca NY, Elmira, NY, Altoona, PA, Lancaster, PA, Franklin, PA...and hundreds more like them.

j.: I don't think so. These carriers are separate entites from US Airways, and they can move immediately to other carriers were US to fail. Commutair moved from US to Continental, and provides service to many small cities they served as US Express. Small cities will still have regional service with or without US Airways. Any disruptions will be minimal. The financial centers of the Northeast need comprehensive service, and they will see to it that regional service is not lost in the Northeast. How I don't know, but if Don Carty can orchestrate a four-airline square dance, the industry can ensure regional service in the NE.

And the merger is not going to protect service levels at Jamestown and Altoona in any event. As the Comedian of Denver, Michael Boyd, has noted, United officials made clear in February 2001 meetings with these cities (most notably New Haven) that they do not intend to preserve regional-affiliate service levels at these communities. Deep cuts will happen on routes that are already high-fare and well used.

A.: The inevitable failure of US Airways will almost instantly impact the hundreds of employees of collateral businesses that rely upon US Airways maintaining a hub presence to support their own businesses. In Pittsburgh, Charlotte, Philadelphia...bus drivers, taxi drivers, parking lot attendants, fuelers, cleaners, hotel employees, restaurant employees, gas station attendants, teachers, church officials, K mart employees....the people of the communities that rely upon US Airways.

J. Again, US officials are responsible for any harm caused by a decline and eventual failure of US. They chose to not face down unions, or rationalize their fleet. They chose to continue pushing a high-fare strategy. They closed down the West Coast PSA operation instead of competing there. They refused over *twenty years,* let alone the 1990s, to fight for market share on E-W. There is no reason US could not fill A330s on transcon routes if they had *worked* over the past twenty years to build them. These failures rest at the feet of Colodny, Wolf, and Gangwal.

A.: I believe that the merger should occur and that the consumers will not be any worse off. If it does not, however, I believe that it is time for the airlines to be re-regulated...obviously congress feels they can run a private industry better than that industry can istelf...let them give it a try. -Mike

J.: Mike, and Boyd, are correct that lay people--namely Congress--don't understand the airline industry well and will probably try to reform it with blunt instruments. Gate redistribution, for instance, should be done on a case-by case basis, in response to applications by individual airlines who have business plans that show that they have a reasonable possiblity of putting LGA, DCA, and BOS gates to good use. Instead, Sens. McCain and Hollings want to impose meat-cleaver percentage-triggered gate redistributions that completely ignore the industry's economics.

If Big Air had behaved themselves the past ten years, and used President Reagan's present of late 1980's consolidation to benefit consumers instead of raping them, they would not be facing the lynch mob today. Rochester, Syracuse and Jamestown are mad as hell and we're not going to take it anymore. Superconsolidation to make raping us even easier, by destroying even the best-managed low-fare carriers, is not the answer. Unfortunately, we may well be past the point where reasonable folks like Mike and myself can affect the outcome.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineDIA From United States of America, joined Jan 2001, 3273 posts, RR: 28
Reply 7, posted (13 years 6 months 2 weeks 1 day 5 hours ago) and read 2293 times:

Just get it over with.

We are losing another airline and are going to pay higher fares; it's inevitable.




Ding! You are now free to keep supporting Frontier.
User currently offlineFlashmeister From United States of America, joined Apr 2000, 2900 posts, RR: 6
Reply 8, posted (13 years 6 months 2 weeks 1 day 5 hours ago) and read 2292 times:
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DIA, you're partially correct.

Higher fares are somewhat inevitable, if the merger fails. Remember, United has pledged no fare increases for two years following the merger's close. Two years is a long time in the airline game, as we all know.

It could be that WN would never service Syracuse or Rochester, becuase of their proximity to Buffalo and Albany. Look at the WN route map (at http://www.iflyswa.com/about_swa/routemap.html), and you'll see that with the exceptions of Hartford/Providence, Southern California, and the Bay Area, WN doesn't serve clusters of cities next to each other. (As for the latter, the clusters serve as good anchors for a north-south service, something that WN is not aiming to do in the Northeast corridor.)

Why? It's because they know that people will drive to get their fares. What incentive do they have to open service to say, Eugene, when they know that people in Eugene will drive 2 hours to Portland to get the cheap flights?

If the merger doesn't go through, and US fails, then you will most assuredly see fares go up in the smaller markets of the Northeast, and you'll see some service disappear at any price. That's a given.

As for market domination at a given station, yes, UA will be dominant at Syracuse and Rochester. Their market shares, though, are hardly high enough for alarm bells to go off. We've endured Wal-Mart taking 80% of market shares in small towns, and that's sat just fine with many local officals. We're talking about another business (that's what these are -- not public entitlement services) having 55-60% of market share.

Finally, the integration pains of US-UA -- and there will be pains -- will be the door of advantage to other carriers who want to get in on the northeast. AA, for instance, is knocking at the door to get big back east, and Carty is smart enough to recognize weaknesses, such as those caused by these pains.

These market forces are not at all different than other industries. The market takes care of the demand and will charge whatever cost the market can bear. While that's disadvantageous for smaller markets, that's capitalism, and to artificially force this industry to behave differently is foolish. (Remember regulation?????)


User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4506 posts, RR: 34
Reply 9, posted (13 years 6 months 2 weeks 1 day 4 hours ago) and read 2277 times:

Flashmeister: Higher fares are somewhat inevitable, if the merger fails. Remember, United has pledged no fare increases for two years following the merger's close. Two years is a long time in the airline game, as we all know.

Jim: Trouble is, fares are already at rapine levels in most medium and small markets, and UA's promise not to raise fares for two years is a bit like a mafia don promising not to raise extortion tribute from local businesses when two neighboring families either merge by marriage or one wipes the other out.

F.: If the merger doesn't go through, and US fails, then you will most assuredly see fares go up in the smaller markets of the Northeast, and you'll see some service disappear at any price. That's a given.

These markets rightly ask, why should it be? They pay the rape fares, fill their turboprops and regional jets (if US's increasing pax loads, and Atlantic Coast's explosive growth at IAD are any indication). The only economy that is being served are excessively high profit targets. And that is something that communities have every right to demand not happen. Laissez faire? No, and too bad. Reasonable, just and the cause of a happy outcome all around? Yes.

F.: We've endured Wal-Mart taking 80% of market shares in small towns, and that's sat just fine with many local officals. We're talking about another business (that's what these are -- not public entitlement services) having 55-60% of market share.

J.: "Endured?" Wal-Mart means far lower prices, and far greater choices, for consumers. They wouldn't succeed in all those small towns without their Southwest-like strategy of high volume and low cost. If Wal-Mart chose to operate like Big Air, they'd go bankrupt--because *consumers have choices* in lawn chairs and hardware.

I'll gladly "endure" Wal-Mart any place I live. But communities should not have to endure airlines treating them as cows to be milked for shareholders with unreasonable expectations. Which is precisely a just value judgment for citizens of a free-market capitalist country to make. Airline execs and stockholders don't like it? Too bad. Reasonable profits, reasonable pay for employees, and reasonable fares are how human communities operate. They can either do it freely and profitably, or the Congressional blunt-instrument-wielders can do it for them and make a mess of it.

F.: Finally, the integration pains of US-UA -- and there will be pains -- will be the door of advantage to other carriers who want to get in on the northeast. AA, for instance, is knocking at the door to get big back east, and Carty is smart enough to recognize weaknesses, such as those caused by these pains.

J. We'll see. During and after the 1980's consolidation, market shares in the Northeast didn't shift much, and the airlines didn't try to take many chunks out of each others's hides. They were more concerned to destroy competition at their bases and stay out of each others' hubs. I'd love to be wrong about this but history doesn't suggest it.

F.: These market forces are not at all different than other industries. The market takes care of the demand and will charge whatever cost the market can bear. While that's disadvantageous for smaller markets, that's capitalism, and to artificially force this industry to behave differently is foolish. (Remember regulation?????)

J.: There's no way to get around the fact that air travel is one of those difficult marriages of public and private. Air travel is a public good and airlines are not autonomous to simply maximize profit and to hell with the communities, of any size, that depend on them. Airlines will be tormented by Congress, rightly, until they accept the inexorable fact that air travel is a vital part of a modern culture where business associates and loved ones are far apart, and thus treat communities justly.

When fares drop, customers are treated like human beings, and profits are derived from a volume-margin mix in *all markets* not just Orlando (rather than pure margin, the current norm), Congressional bulls-in-the-china-shop like McCain and Hollings will go back to munching grass on the white-domed pasture and let the airlines run themselves. The choice is the airlines' to make.

Jim





Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineAirwaysdc9 From United States of America, joined May 1999, 204 posts, RR: 3
Reply 10, posted (13 years 6 months 2 weeks 1 day 3 hours ago) and read 2253 times:

A few quick points.

Jim and I usually agree a lot more when we can actually speak with each other. I think we compromise a lot more in chat than we do in msg board format. In any event...

1. I still believe that the airlines are private businesses and are free to operate however they need to in order to meet basic supply and demand economy.

They are not a public utility. However, I would be willing to entertain the idea of re-regulation.

2. Also, there is no law about "bigness". If US Airways & UAL are, by some miracle, able to satisfy antitrust issues, then they should be permitted to complete their merger. Total size of the carrier does not necessarily mean monopolistic.

3. Finally, I still believe that major network carriers do not, and never will, compete in price. Only the influence from low-fare carriers lowers prices.


User currently offlineFlashmeister From United States of America, joined Apr 2000, 2900 posts, RR: 6
Reply 11, posted (13 years 6 months 2 weeks 1 day 3 hours ago) and read 2254 times:
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Jim, this is something we've gone round-and-round with...

Why do you think that all markets deserve 757s (or A321s to be fair) with leather seats, cheery flight attendants, and $4.99 fares?

What right do we have to dictate to businesses what services they will provide? Spare me the public subsidy rhetoric, please -- almost every major infrastructure project in the US has public money in it, yet we pick on the airlines as an easy target to demand irrational services!

We choose to err on the side of capitalism in the US. Other countries choose differently, and they are quite happy running 757s with 34 people on board. We place the burden on markets to make themselves attractive for investment. More often than not, we choose not to tie the hands of businesses by dictating that they provide X service for Y price.

Responses to your other points:
Jim: that [high fares and RJs/turboprops] is something that communities have every right to demand not happen.
Aaron: As I've stated countless times before, should the same communities demand broadband from their telcos, HBO from their cable providers, and free milk from Kroger? I think not.

Some communities have tried to take matters into their own hands by encouraging other airlines to start. Iowa tried with AccessAir, and that airline was managed into the ground. Colorado Springs went with WestPac -- including TONS of local gov't support -- and it was successful until they grew too fast and collapsed under their own weight. WestPac would still be around if it wasn't for their gross mismanagement.

If ROC and SYR really are that maligned, support new service from entrants (jetBlue, for one), and then follow through with the bookings. If the market is too small for that sort of thing, frankly: too bad. Living in a small city is attractive for many things, not attractive for others, and air service is one of those. That's life.

J: During and after the 1980's consolidation, market shares in the Northeast didn't shift much, and the airlines didn't try to take many chunks out of each others's hides. They were more concerned to destroy competition at their bases and stay out of each others' hubs

A: Ahh, but the 1980's consolidation economy wasn't the greatest for airlines, either... and their cost structures were still evolving from deregulation. Now, the current economic situation isn't exactly rosy, either, but it's a far cry from some of the dire straits of the 80s and early 90s. Airlines today can be ballsy when it comes to expansion due to new dynamics in the industry -- and (gasp) that could mean RJs, but beggars can't be choosers. Yes, small markets are beggars.

J: Airlines will be tormented by Congress, rightly, until they accept the inexorable fact that air travel is a vital part of a modern culture where business associates and loved ones are far apart, and thus treat communities justly.

A: Be very, very careful here. You say that air travel is a vital part of a modern culture (or society). Are you really prepared to say that airlines should be managed socially rather than in a capitalist manner? What about ISPs? Can we demand unrealistic service at rock-bottom prices from them too, since the Internet is now a vital part of a modern culture, too? That, my friend, is a very slippery slope.

J: When fares drop, customers are treated like human beings, and profits are derived from a volume-margin mix in all markets

A: You're correct, albeit in Utopia. Costs are costs. Airlines have cost X. They have a fiduciary responsibility to cover costs. That means that some services are going to cost more than others to consumers. Wal-Mart does not charge the same price for milk in every store. They charge what the market will bear and what will cover their costs, with some profit.

If all airlines will make mountains of cash off of their passengers all the time, why are they losing money this quarter? Becuase their costs are higher than their revenue. Simple as that.

If we are going to dictate prices, then we had better be prepared to dictate costs. How do you think employees would feel about their wages being slashed and their potential wage growth to be miniscule? Not good. Do you really think that McCain will be going down that road? Doubtful.

Bottom line: You can't dictate one end of the equation without dictating the other end, and that only successfully occurs in the great land of Utopia.


User currently offlineAirwaysdc9 From United States of America, joined May 1999, 204 posts, RR: 3
Reply 12, posted (13 years 6 months 2 weeks 1 day 3 hours ago) and read 2241 times:

Wolf's speech to the House Committee...

Mr. Stephen M. Wolf
Chairman
U.S.Airways Group
2345 Crystal Drive
Arlington, VA, 22227

--------------------------------------------------------------------------------


Mr. Chairman, Ranking Member Towns, and Members of the Subcommittee, on behalf of all of us at US Airways, I appreciate the opportunity to address what effect our merger with United will have on consumers.

Fundamentally, as I have said in the opportunities I have had to testify since this deal was announced, the merger with United is a viable alternative to the difficult economic realities facing US Airways and the consumers we serve. As an amalgamation of pre-deregulation mid-sized regional carriers, US Airways is facing a perilous future. It is neither a low-cost, low-fare airline, nor a full scale, global network carrier. All other mid-sized, mature cost carriers have either disappeared completely or have gone through multiple bankruptcies. There are only two platforms for competitive success in commercial aviation and US Airways does not fit either. All of us are fully aware of what has happened to Braniff, Eastern, Pan Am, and now TWA which is facing the bankruptcy court -- not for the first time, not for the second time – but for the third time.

At US Airways, our situation is quite stark – and quite simple. The status quo is not an option for US Airways, our employees, and the communities we serve. In sharp contrast, the merger with United Airlines guarantees a secure future for US Airways’ employees, preserves service to cities that US Airways serves, and enhances competition.

US Airways in its current form is a combination of several small, pre-deregulation regional carriers such as Allegheny, Mohawk, and Piedmont. As a result, the airline has a route network that, like its regional airline predecessors, is largely confined to short-haul routes in the Eastern United States. Indeed, US Airways has the shortest average stage length of any major carrier. Combined with a route structure that is essentially confined to the East Coast corridor, this severely limits US Airways’ ability to mass enough presence in other areas to support any material expansion of its system.

As a consolidation of pre-deregulation carriers, US Airways also pays labor rates that are comparable or higher than those of American, Delta, Northwest, and United. The difference between US Airways and these other carriers, however, is that the other carriers have vastly larger route systems which permit them to spread their costs over a great number of more efficient, long-haul segments that are relatively less costly to operate.

Caught in the vice between its short-haul, high costs route system and its mature labor structure, US Airways is far and away the highest unit cost domestic airline. For the year 1999, US Airways’ average system cost per seat mile, the measure most commonly used to determine costs, was 14 cents. By comparison, the average system costs during the same period was approximately 9.5 cents per seat mile for the major carriers and 7.5 cents for low-cost competitors such as Southwest. In sum, when compared to Southwest, a carrier that is aggressively expanding throughout US Airways’ East Coast operating territory, US Airways has costs that are nearly twice as high.

When I joined what was then USAir a little over four years ago, I recognized the historical reality that placed US Airways in such an "in-between" position—one that could not be sustained over the long run. US Airways was neither a "national" carrier with an extensive nationwide network, nor a "regional" carrier with low costs and point-to-point routes. Accordingly, with the support of our employees, we committed to a strategic plan to restore financial stability to the company and establish the carrier’s competitiveness, despite our high costs and incomplete route structure. To this end, we have made enormous progress. We have made significant and sustained improvements in our operational performance, established harmonious labor agreements, begun fleet modernization, and expanded our international service.

However, the fundamental problems that constrain US Airways—high costs, short segments, and a limited network—remain in the face of increasingly intense competition. Unfortunately, US Airways does not have the financial reserves or the cost structure to support significant internal expansion. Because of our reliance on short-haul service, we have inherent difficulties earning unit revenues at the levels necessary to cover our high costs.

Meanwhile, competition from well-financed, well-managed low-cost carriers such as Southwest, JetBlue, AirTran and others has been increasing dramatically on US Airways’ most heavily traveled and most profitable routes. In 1995, for example, low-cost carriers had 618 departures per day in the eastern United States, US Airways ’ major service area. By 2000, that number had almost doubled to 1,098. The low-cost carrier share of capacity in the region has grown 158 percent. These carriers now offer more than one out of every four domestic seats up for sale in that region. At the same time, major carriers’ share of capacity actually fell one percent.

In the last year alone, Southwest, AirTran and Delta Express, as well as new entrants such as JetBlue and Spirit, have added 181 daily departures out of East Coast airports – a 25.5 percent increase over 1999. Since January 1, 1996, Southwest has increased its intra-East route system in terms of daily departures by 238% (157 to 531) and in terms of aircraft by 326% (19 to 81).

Facing ever more low-fare competition on its key eastern routes, with costs well above the industry average and no realistic way to alter that condition, US Airways is increasingly limited in its ability to support its route network and maintain profitability. Accordingly, as a stand-alone carrier, US Airways, which has sustained significant net losses over the past decade, will have no choice but to continuously downsize, cutting jobs and service in the process.

As Chairman of US Airways, I have worked hard to make serving our customers my top priority, yet, we face this reality for the entire US Airways family -- we cannot continue to provide the broad array of services we currently offer or employ the 45,000 people who work for us without this merger. Since the merger is the only viable option for preserving the services and jobs we offer, I hope you will join me in concluding that this deal is in the consumers’ best interest.

To evaluate this transaction on consumers, I believe we must first consider the services US Airways provides and would continue to provide to consumers as a result of the merger. US Airways has invested heavily in infrastructure, aircraft and personnel and we have spent many years building a network of services around the country. The result is convenient access from these cities to hundreds of destinations across the country and throughout the world. This has been not only a foundation of economic growth over the years, but a lifeline to consumers and businesses that require frequent and wide-ranging air service. If this lifeline is cut short, scores of communities could be left without service.

One of the key ways the merger will preserve the service US Airways customers have enjoyed is through the creation of a new airline, DC Air, which will be based out of Reagan National and owned by one of the Washington area’s top corporate citizens, Robert Johnson. Mr. Johnson has made a commitment that DC Air will take over most of US Airways’ flights in and out of Reagan National to 44 cities, preserving service to scores of small and medium-sized communities across America.

DC Air will also preserve competition by challenging existing airlines at one of Washington’s most convenient airports, thus bringing down the cost of air travel for consumers. Mr. Johnson has already committed to operating his airline as a highly competitive carrier, one that will clearly alter the competitive landscape in the greater Washington, D.C. area. United Airlines will have a hub at Dulles International Airport, DC Air will have a strong presence at Ronald Reagan National Airport, and Southwest Airlines will have a strong presence at Baltimore-Washington International Airport. All three airlines will be competing to provide service to the millions of people who travel to the nation’s capital and surrounding areas each year. In the absence of these mergers, the Washington area faces the prospect of one primary carrier, the loss of jobs and the loss of thousands of daily flights.

The entire US Airways family will also benefit from the job security this merger offers. With major companies announcing lay-offs on a daily basis, such as Daimler Chrysler, Lucent, AOL-Time Warner, Cisco, Intel, WorldCom and GE, and others like Bradlees, Montgomery Ward and TWA declaring bankruptcy, the job security this merger offers is especially important in this period of economic instability. It is critically important that our 45,000 US Airways employees are able to keep their jobs as part of this transaction – while so many other jobs in this economy are at risk.

The merger of US Airways with United provides a bright future for our employees, the communities we serve, and competition within the industry. I wholeheartedly believe that the merger will have tremendous benefits for consumers – both in terms of protecting services to small and mid-sized communities and saving thousands of high skilled, high paying jobs. In the interest of preserving these consumer benefits, I urge you to support this merger.



User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4506 posts, RR: 34
Reply 13, posted (13 years 6 months 2 weeks 1 day 3 hours ago) and read 2240 times:

F.: Spare me the public subsidy rhetoric, please -- almost every major infrastructure project in the US has public money in it, yet we pick on the airlines as an easy target to demand irrational services!

J. Maybe I don't write clearly, but I can't get over the feeling that you read far more into my words than I'm actually saying. As with AirwaysDC9, maybe we would do better in private conversation. In any event, here goes.

Trouble is, consumers are *not* demanding "irrational services." Airlines' ability to make a profit is simply not the issue here. Big Air demonstrated conclusively in the 1990's that they can make money in medium and small markets. The question is not, can they make money? They can, and do. The current losses, in my mind, are a mixture of temporary factors and creative accounting intended to build political support for supermergers and opposition to union salary demands.

But there are limits to how wide a profit margin the airline industry can expect, and I guess this is just an area where we agree to disagree. Like it or not, the majority agrees with me, as do their elected representatives. People want to go places, and they expect to be able to do it for a reasonable--if not necessarily Southwest--price. And they shouldn't have to live in one of the Blessed 58 cities to do it. Trouble is, the alternatives today are Southwest or gouging, and that's not a recipe for consumer peace. A happy medium must be found.

The problem is that most consumers and their reps don't understand the airline industry--and the reps think in terms of blunt policy instruments. Most people at this forum, I'd hope, recognize that percentage triggered gate redistribution is a communistic horror. Lynch mobs don't think issues through carefully. I'm sorry, but that's the way it is.

The best thing for airlines is not to give elected officials, who seem to be especially ignorant of the economic realities of air travel, any reason to get involved. But they don't. And now the bulls are charging. That may not be pretty from a laissez-faire perspective, but it's the reality.

F. We choose to err on the side of capitalism in the US. Other countries choose differently, and they are quite happy running 757s with 34 people on board. We place the burden on markets to make themselves attractive for investment. More often than not, we choose not to tie the hands of businesses by dictating that they provide X service for Y price.

J. I'm not sure where you get this from, since neither I nor anyone else have demanded that airlines fly empty planes around. That would be socialism, and we have better things to spend our money on. But we do demand that the full planes airlines do fly be run at reasonable profits that don't rake us in order to make an investor overly rich.

F.: Jim: that [high fares and RJs/turboprops] is something that communities have every right to demand not happen.

J. I didn't say that. I said that the turboprops and RJs should have reasonable prices. Many markets won't support narrowbodies, and of course airlines shouldn't be forced to fly them there.

Aaron: As I've stated countless times before, should the same communities demand broadband from their telcos, HBO from their cable providers, and free milk from Kroger? I think not.

Consumers, as I read it, are not demanding that. They are simply demanding reasonable prices and good treatment. HBO is a premium service, and I don't see anyone demanding premium service for free-just reasonable prices on what they get. It's Congresspeople, not consumers, who think blunt-instrument legislation is going to solve air travel problems.

<>

Communities that take matters into their own hands usually pay for it. WestPac had nearby Denver and its high-priced new airport driving traffic at COS, so WestPac would indeed have survived with better management. DSM is a medium-size city on the plains. Access Air is a case study in how *not* to found a local airline. The results were entirely predictable.

F. If ROC and SYR really are that maligned, support new service from entrants (jetBlue, for one), and then follow through with the bookings. If the market is too small for that sort of thing, frankly: too bad. Living in a small city is attractive for many things, not attractive for others, and air service is one of those. That's life.

J. Relief is coming slowly to ROC and SYR, primarily in the form of JetBlue, we're happy about that no question. But we still get the BOHICA treatment on other routes. These are not small cities, and they do follow through with bookings (well Rochester does, JB doesn't get to SYR until May). We may need to drive to Buffalo and Albany for awhile, but will do everything to change that situation we can. JetBlue's success in Rochester is the best argument for more low-fare service there. Syracuse will likely follow suit.

F. Airlines today can be ballsy when it comes to expansion due to new dynamics in the industry -- and (gasp) that could mean RJs, but beggars can't be choosers. Yes, small markets are beggars.

J. Again, I wasn't complaining about RJ's and turboprops, just saying the fares should be reasonable. Airlines should fly the a/c a market supports. Please read more carefully before accusing me of such a socialistic practice!

A: Be very, very careful here. You say that air travel is a vital part of a modern culture (or society). Are you really prepared to say that airlines should be managed socially rather than in a capitalist manner? What about ISPs? Can we demand unrealistic service at rock-bottom prices from them too, since the Internet is now a vital part of a modern culture, too? That, my friend, is a very slippery slope.

J. Indeed one should be very careful talking about what industries we treat as private-public marriages. And that's precisely a discussion that's good for the public, industry, and representatives to have. Socialism--full regulation, wasn't working for the airline industry. But full laissez-faire deregulation has not worked well either. Which is not surprising, since air travel has public and private elements.

ISP's aren't comparable to airlines, since there are scads and scads of them, and a consumer has many choices. There are only a few airlines and they can hold communities hostage. ISP's can't.

Airlines have an *oligopoly.* Every city can't provide its own airline. The normal dynamics of capitalism can fall apart at many communities who know by experience that they can support profitable air service. Some investor somewhere wants a few more percentage points, and that cashes out as profitable service cut somewhere. Which communities rightly and justly decry.

A: You're correct, albeit in Utopia. Costs are costs. Airlines have cost X. They have a fiduciary responsibility to cover costs. That means that some services are going to cost more than others to consumers. Wal-Mart does not charge the same price for milk in every store. They charge what the market will bear and what will cover their costs, with some profit.

J. No, in reality, not Utopia. Costs are costs and the airlines have demonstrated conclusively that they can cover them. No one is demanding that airlines not obey basic supply-demand realities. We simply demand that they not hold every community to an extremely high profit margin standard. That is reasonable, and it is based upon hard experience.

As for Wal Mart, they survive by charging the lowest prices in their markets. Sure, that will differ among markets, but *relative to other stores in the market Wal-Mart has low prices.* Thus they prosper. And thus they would go bankrupt if they abandoned that strategy.

No one is asking for a free ride.

A. If all airlines will make mountains of cash off of their passengers all the time, why are they losing money this quarter? Becuase their costs are higher than their revenue. Simple as that.

J. This quarter. And as I said, they've been very profitable in the late '90s. Economic factors particular to this quarter are affecting profits, as is creative accounting--which of course is tough to prove, but whose motives are quite clear--to create political pressure against unions and for consolidation. The airline industry simply is *not* on the brink of bankruptcy unless it consolidates.

J. If we are going to dictate prices, then we had better be prepared to dictate costs. How do you think employees would feel about their wages being slashed and their potential wage growth to be miniscule? Not good. Do you really think that McCain will be going down that road? Doubtful.

J. The market, like it or not, is going to reduce labor costs. No one will "force" it to happen legislatively. The time of the Railway Labor act has passed, as the airline unions are the first to say. It will be replaced by something that allows faster resolutions, and breaks the still-obtaining pre-deregulation cost structure. The unions will get faster resolutions, and business will get cost reduction (through work rules, pay increases will be forthcoming in most cases as should be) The only legislation here will likely be the new labor-relations act.

A. Bottom line: You can't dictate one end of the equation without dictating the other end, and that only successfully occurs in the great land of Utopia.

J. Bottom line: No one is demanding to dictate the cost end of the equation, which is not the problem, we are demanding a change in profit expectations, which Mr. Goodwin tells the Senate, just aren't high enough. We are demanding that prices *REFLECT* costs with reasonable profit.

No utopianism here. Just demands that the parties involved treat each other justly. And that's at the heart of any successful free market economy.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineFlashmeister From United States of America, joined Apr 2000, 2900 posts, RR: 6
Reply 14, posted (13 years 6 months 2 weeks 1 day ago) and read 2205 times:
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Jim: The time of the Railway Labor act has passed, as the airline unions are the first to say. It will be replaced by something that allows faster resolutions, and breaks the still-obtaining pre-deregulation cost structure. The unions will get faster resolutions, and business will get cost reduction (through work rules, pay increases will be forthcoming in most cases as should be) The only legislation here will likely be the new labor-relations act.

and

Jim: The question is not, can they make money? They can, and do. The current losses, in my mind, are a mixture of temporary factors and creative accounting intended to build political support for supermergers and opposition to union salary demands.

Aaron: I agree that the Railway Labor act is obsolete and should be replaced. I'm all for reducing costs. But one can't expect reduced prices without reduced costs... And as for your allegation of creative accounting, that's a much more serious charge. What does Northwest stand to gain by reporting losses this quarter? Nothing - they can't buy anyone... and they're not going to get bought. On the contrary, if they reported profits, they could argue for the status quo, which they should considering that they'll be one of the wallflowers at the dance should AA-TWA and US-UA consummate. Finally, union salary demands are partially to blame here, too, but that's a different argument for a different thread.

J: But there are limits to how wide a profit margin the airline industry can expect, and I guess this is just an area where we agree to disagree. Like it or not, the majority agrees with me, as do their elected representatives.

F: This is one area that we must agree to disagree. Limiting business growth and profitability, in my view, is precisely contrary to the basic tenets of our socioeconomic system. It's against everything capitalism stands for from my perspective... but another point:

You mention that the majority agrees with you. I'm not so sure about that. Congress is upset with service mostly, not necessarily prices. Look at the passenger bill of rights that was threatened last year -- it was all about customer service, not about prices and hence profits. And even if Congress has a majority in that area, the Bush administration would not, in my view, support restraint on a corporation's right to make money legally. On that agree (and precious few others), I agree with the Bush administration.

I would have less of an issue with all of this if we just cut to the chase and got down to the bottom line: You allege that we need to get less expensive, better service to communities such as SYR and ROC. Short of forcing the airlines to do this, what can one do? Nothing, besides make the market more attractive, which is the method I prefer. Otherwise, we're back to dictating routes and prices (to an extent), which is a throwback to socialism/regulation, which you yourself acknowledge doesn't work.

So, how will mergers affect this? They won't!

With the US-UA merger, the same routes will be flown, the same margins will be expected of them, and the same fares will be charged.

Without the US-UA merger, te same routes will be flown, the same margins will be expected, and the same fares will be charged, except that in a few years, routes will be lost due to the collapse of US.

I agree with AirwaysDC9 on this point: the majors don't compete on price, and they never will. Prices competition only occurs when a low-cost entrant begins service to a market. The Southwest/jetBlue factor has much more to do with fares decreasing than US and UA competing on their normal fares. I agree and concede that Southwest has made a ton of money and will continue to, but their costs are much, much lower than UA, US, or any other major for that matter.

And, a single airline with 60% market share won't preclude Southwest or jetBlue from beginning service. We've seen both of them go into airports where there is service dominated by other carriers, and they take business from them. They do it all the time, and they'll continue to.

So, merger or no merger, the task for Rochester and Syracuse (and Eugene and Colorado Springs and Des Moines and every other "underserved/overpriced" market) is the same -- make your market attractive and sell, sell, sell. Mergers don't have anything to do with it.

-Aaron


User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4506 posts, RR: 34
Reply 15, posted (13 years 6 months 2 weeks 23 hours ago) and read 2194 times:

Aaron: What does Northwest stand to gain by reporting losses this quarter. Nothing - they can't buy anyone... and they're not going to get bought. On the contrary, if they reported profits, they could argue for the status quo, which they should considering that they'll be one of the wallflowers at the dance should AA-TWA and US-UA consummate. Finally, union salary demands are partially to blame here, too, but that's a different argument for a different thread.

Jim. You're right about Northwest, I painted with too broad a brush there. DL, US and UA all have motives to report losses, but Northwest doesn't. DL-CO is much likelier than a pairing involving NW, and the CO-NW alliance throws even that into doubt. NW does not have a motive to misstate earnings, as far as I can tell.

Aaron: You mention that the majority agrees with you. I'm not so sure about that. Congress is upset with service mostly, not necessarily prices. Look at the passenger bill of rights that was threatened last year -- it was all about customer service, not about prices and hence profits. And even if Congress has a majority in that area, the Bush administration would not, in my view, support restraint on a corporation's right to make money legally. On that agree (and precious few others), I agree with the Bush administration.

Jim: This is a good point. I'm used to listening to Rochester's Rep. Louise Slaughter and New York Sen. Charles Schumer denouncing high airfares in upstate New York, and Members from similarly fare-gouged areas. Support for service improvements is what is broadest--but I still think there's a lot of anger out there (including on the Hill) about fare prices. Most Members I hear complaining about airline service in 2000-2001 (as opposed to 1999) mention high fares as a problem.

But service is the broader and more enduring point of contention with Congress. Probably because they don't pay for their own tickets. :+)

Aaron: I would have less of an issue with all of this if we just cut to the chase and got down to the bottom line: You allege that we need to get less expensive, better service to communities such as SYR and ROC. Short of forcing the airlines to do this, what can one do? Nothing, besides make the market more attractive, which is the method I prefer. Otherwise, we're back to dictating routes and prices (to an extent), which is a throwback to socialism/regulation, which you yourself acknowledge doesn't work.

Jim: Which, fortunately, is exactly what these communities are doing. They have cut landing fees, and in Rochester's case already proving the market for low-fare service to a major market with hub links. So that much is definitely going on. Also, if someone figures out how to do low-fare service with an RJ or turboprop arrangement, (a la Shuttle America) that will be of great help-and might extend low-far reach directly to Jamestown and Altoona too.

Aaron: So, how will mergers affect this? They won't! I agree with AirwaysDC9 on this point: the majors don't compete on price, and they never will. Prices competition only occurs when a low-cost entrant begins service to a market. The Southwest/jetBlue factor has much more to do with fares decreasing than US and UA competing on their normal fares.

Jim: You're right that mergers won't affect Oligopoly-carrier price competition, which indeed does not exist. The reason I oppose megamergers like UA-US is my longstanding theory that a Big 3 could concentrate market power to destroy the low-fare carriers, even the best managed. I was not clear here, and gave the impression that Oligopoly carrier competition somehow affected prices. As you say, it doesnt.

But I have--largely due to your arguments and those of a few others--begun to think there is faint hope for at least Southwest in a SuperBig 3 situation. Good management and a better product--especially one with an FF program--have some chance in a free market economy. But SuperBig 3 will definitely test the limits of what they can do in terms of predatory pricing and capacity dumping to destroy WN and others. It would be ugly for a few years after superconsolidation, at the very least.

Also, I still think that US would not have near the legal problems getting a merger approved if it wasnt' an automatic supermerger combo like UA. A NW merger would go through. Yes, I know they want UA route synergies, but US may seriously want to consider the possibility of a merger that would pass DOJ muster easier. I myself would be much less concerned about a US merger that did not automatically lead to SuperBig 3.

Aaron: And, a single airline with 60% market share won't preclude Southwest or jetBlue from beginning service. We've seen both of them go into airports where there is service dominated by other carriers, and they take business from them. They do it all the time, and they'll continue to.

Jim: Which we'll get to see in Rochester and Syracuse if UA-US goes through.

Aaron: So, merger or no merger, the task for Rochester and Syracuse (and Eugene and Colorado Springs and Des Moines and every other "underserved/overpriced" market) is the same -- make your market attractive and sell, sell, sell. Mergers don't have anything to do with it.

Jim: And that much we definitely agree upon. All of these cities need to sell themselves hard, especially with hard data they get from studies by respected consulting firms, etc. Numbers sell the routes in any event.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
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