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"AA Largest...Now What?" [ex Planebusiness]  
User currently offlineImkeww From , joined Dec 1969, posts, RR:
Posted (12 years 11 months 4 weeks 11 hours ago) and read 1280 times:

Thees ees a velly intellesting discussion going on at Planbusiness.com, thought some of you would like to have a looksie.

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REACC1:

I [sic] just seems to me that the powers that be are extremely concerned about anti competitive scenarios erupting from the US/UAL deal. The merged carrier would be too large and too dominant. What about AA/TWA? Now that they are the largest, I haven't heard a peep about anticompetition. Consolidation of the airline industry? Why doesn't this deal spawn a few more mergers? Is it just DC? AA has had its fair share of law suits arrising from anti competitive practices and now they are blessed with all the ammo they need to continue. Nothing against AA, but I am concerned with the rational [sic] here.

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LATREAL:

Well since you asked, I think it has a lot to do with DC. That is where all the powers that be are, and AA has almost zilch market share there especially DCA (that is where I prefer to fly from). Note that I am not including Eagle in that market share, because I personnally don't like those props, and have yet to ride in a RJ .
I don't think that the politicos see a major threat because of that reason alone. I am told that aa is the number 3 carrier in the dc metro area, and I don't know if its true but if they are, they are a very distant number 3.

I don't think that the politicos see a major threat because of that reason alone. I am told that aa is the number 3 carrier in the dc metro area, and I don't know if its true but if they are, they are a very distant number 3.

[This message has been edited by LATREAL (edited 04-25-2001).]

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Zip:

It all comes down to...I guess UAL DID'NT "contibute" enough to the Bush campaign last year, after all AMR used their new 737 to help old George W get to his big bash in DCA!!

Just a thought.....

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LATREAL:
Yeah, that too

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whlinder :

I agree 100% and have been wondering the exact same thing for the past few months. Its as if US+UA is going to be a terrible merger and be anti-competitive and put other airlines out of business and raise fares and all, but AA/TWA is just fine and dandy! Even after AA put Legend out of business with strong-arm tactics and has been sued for being anti-competitive. And AA bought its only major competitor in the Carribean, but no one seems to care.

I don't exactly want UA/US to go through, but the DOJ/Congress is hypocritical to not even acknowledge AA/TWA's anti-trust issues while being extremely critical of those of UA/US.

[This message has been edited by whlinder (edited 04-25-2001).]

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imkeww:

Thus has been the source of my frustration.

Why does no one else seem to see this? If only a legitimate publication would point out this important fallacy.

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us2:

Politics is always part of the airline business, because politicians are frequent flyers and executives big contributors. With TWA, you had a convergence from both parties in favor of the AA acquisition. Dick Gephardt (D-STL, Minority Leader) cared about the TWA jobs that would be lost in his district and George W. Bush (R-TX) apparently wasn't averse to seeing Dallas based AA get the TWA assets. I doubt that there would have been any difference if Gore had won the recount fight. Incidentally, the UA/US merger might have been in even greater distress had the Dems won the WH and Congress, as Democratic house members from the West and Northeast (and their constituents!!!) would have been more personally impacted by the merger and had the influence with the Administration to block the deal. Plus, Democrats are traditionally more receptive to anti-trust concerns. If anything, AA's history of being anti-competitive (remember the infamous Bob Crandall phone call to Braniff??) is working against the UA/US deal because it hits DCA, the airport near and dear to the hearts of all congressmen by turning over capacity at DCA, through the DC Air component of the deal, to AA. There are an awful lot of members of Congress who rely on U and/or US to get back and forth to DC from their districts. I have been on U planes with a number of members over the years out of or into DCA, Ds and Rs alike. When a potential deal hits members personally like this one would, its natural to expect that it will receive heightened scrutiny.

US/UA is being treated differently from AA/TWA because with TWA you had a markedly different situation because TWA was in imminent danger of going out of business. Wolf is trying to make the same argument, but with over $1 billion cash in hand, the argument isn't being taken seriously. U is a long way from bankruptcy with that kind of cash on hand and much better core assets on which to build than TWA had.

[This message has been edited by us2 (edited 04-25-2001).]

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ITRADE:

Folks, you've got to remember a couple things about the AA/TW deal. TW was literally weeks away from being totally bankrupt. The situation was dire and everybody knew it. The situation is not the same at US - irrespective of what W&G croon about to every reporter within earshot range.

Moreover, from a DOJ review standpoint, AA was acquiring a MUCH smaller carrier and was acquiring really ONE hub - STL. The traditional DOJ analysis with regards to this deal pales in comparison to the fact that UA is acquiring a carrier at least twice the size of TW, a carrier with at least three major hubs and large marketshares at at least four other major business airports, and a carrier which is BY FAR the most dominant carrier in the most densely populated portion of the country.

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CLT-US:

Despite the occasional setback here and there, AA has always seemed to be the "teacher's pet" airline where the federal government is concerned. They pretty much get their way the vast majority of the time. While it's true there are many differences between the UA/US and AA/TWA deals, it still boils down to consolidation. But the uproar on Capitol Hill regarding the possible merger of UA and US has been almost comical in its sense of panic. Meanwhile, the orchestrated bankruptcy of TWA and subsequent "saving" of it by AA is applauded by most in Washington as a good thing. The politicians go on about how it saved the jobs of all the former TWA employees, which I admit is a BIG positive. But there seems to be no concern whatsoever for the distinct possibility that, should the UA/US deal be nixed, the cowardly leaders of US will merely sell off the airline in bits and pieces, thus jeopardizing thousands of jobs. Where is Washington's concern there?

I'm no industry expert, merely an airline employee and observer, but it just seems as if a double standard is at play here. AA has long been and continues to be the favored son among airlines, while United seems to be the current "bad boy" in the industry. The government, press and public are already engaged in a war of rhetoric about problems with the airlines, problems both real and perceived (mostly perceived, in my opinion). In that atmosphere, someone has to be the whipping boy and right now it's UA. They can do no right in the eyes of many. Add to this the fact that the government and press have NEVER liked US Airways and you get a merger of 2 rather unpopular characters. It's no wonder the deal faces an uphill battle. AA obviously greases a helluva lot of the right palms in DC.

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N49921:

What antitrust issues? There are two reasons why AA/TW flew (excuse the pun) through DOJ review. First, it had little material impact on competition in the industry. Sure, it is enough to make AA larger than UA, but we are not talking about significant changes in market share. TW had little significant market power outside of STL, and AA buying TW created very few new monopoly routes - virtually none of them in mid to large markets. Moreover, AA/TW is not going to pressure other majors into consolidation. Second, it was a fire sale purchase. That makes a big difference considering that AA is buying assets rather than a carrier. Any other major could have come in and paid more cash to get TW. The fact is, AA/TW is really not a significant consolidation and will have little material impact in the market as a whole.

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mcorores:

Outta curiousity....does not the new created AA/TW now control roughly 50pct of the traffic to the Caribbean? Talk about competive issues!

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LATREAL:

Out of curiosity (I really don't know), is the carribean open skies?

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ITRADE:

The way DOJ does its analysis of mergers is to look at whether or not the merged entity creates an anticompetitive situation in the marketplace. With regards to airlines, DOJ looks at domestic city to city marketshares. This is called a HHI analysis. What DOJ does is it sees that between DEN and PHL, there are two competing carriers flying the routes non-stop - UA and US. By combining the two carriers, you've eliminated all competition and have created a "concentrated market". If you have enough concentrated markets, you raise anticompetitive concerns (i.e. SFO-BWI, PHL-DEN, IAD-PIT, etc.)

The issue I raised with regards to AA-TW is that of all the U.S. major cities served by the two carriers, only STL-DFW and MAYBE STL-JFK would see a diminishment of service. Compare that to BWI-LAX, BWI-SFO, SFO-PHL, SFO-CLT, SFO-PIT, DEN-PHL, DEN-PIT, DEN-CLT, LAX-CLT, LAX-PHL, LAX-PIT. When you see these markets - all major passenger markets - DOJ raises its eyebrows.

It is not an issue of who has the biggest number of flights in the long run - that is a minor issue. It's the HHI pair analysis.

You're forgetting STL-LAX, STL-MIA, and a plethora of caribbean routes. (You can bet the caribbean peoples will be crying over this).

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Imkeww:
You're forgetting STL-LAX, STL-MIA, and a plethora of caribbean routes. (You can bet the caribbean peoples will be crying over this).

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Your thoughts? For more direct discussion with the posters, go to planebusiness.com

Otherwise, it would be interesting to see what a.net people say at this point of the thread.

3 replies: All unread, jump to last
 
User currently offlineImkeww From , joined Dec 1969, posts, RR:
Reply 1, posted (12 years 11 months 4 weeks 4 hours ago) and read 1171 times:

3 more from today:

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CLT-US:

ITRADE--
I have no doubt that the HHI analysis you mention is what the DOJ uses in determining anti-competitive issues. But there are countless city-to-city pairs already in existence that are only served by a single airline, so the DOJ's argument against it doesn't hold a lot of water, in my opinion. Furthermore, did AA not agree to serve the routes that would've become UA-only routes for at least 10 years, whether or not those routes make a profit? Why wouldn't that have satisfied the DOJ's concerns about monopolistic routes? My point remains that it all comes down to politics, not facts or common sense. And in that political game, AA generally wins, UA and US generally lose.

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N49921:

Actually, I don't think in this case politics was a big issue. It is hard to build a compelling reason why the DOJ should have blocked this merger.
Just a little brief clarification on HHI first. HHI is the sum of market share for each firm (squared), and is an index of concentration in an market. Anything over 1800 is considered concentrated. Four firms with 25 percent market share in an industry would be considered concentrated. The DOJ has certain guidelines as to what impact a merger can have given an initial HHI in that market. For a market with an HHI over 1800, the DOJ should block any merger that increases the HHI by more than 50 points. Under 1800 (and above 1000) the benchmark is a 100 point change in the index. Although, I'm not sure if these guidelines are set in stone or just a baseline guide.

However, the definition of the relevant market is a major consideration. Most city-pair markets have an HHI in excess of 1800. However, if the market is total domestic passengers, then the combined AA/TW has very little impact on the HHI - less than 25 points (in a market well under 1800 to begin with). The DOJ could also separate the domestic market into regional markets and use those. Again, AA/TW has very little impact in most regions - far less than 100 points.

Lastly, the DOJ could look at every market-pair and see how many have a jump in excess of 100 and what percent of total passengers are impacted in these markets. Again, it is likely a very small number. The big overlap is SJU, and that is not a very significant market. Hub-to-hub routes out of STL are a consideration, but again, we are talking about very minor markets. Moreover, WN is quite strong in STL and keeps the change in HHI minimal in many of the core TW/AA routes (like LAX or Chicago). I think the DOJ would have had a hard time defending a decision to block this merger on economic grounds.

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UAL777flyer:

As with every business decision, timing is everything. The timing of the UA/US deal hasn't been good for UA from the get-go. The overwhelming perception is that UA Senior Mgmt is too inept to solve their current problems, let alone tackle the significant challenges of integrating an airline the size of US. Whether it's true or not is irrelevant. That is the perception. And we all know that perception is reality most of the time.
UA's labor/operational problems have been headline news for a year now. Add to that the continuing gridlock of the ATC system, which is causing delays/cancelations to climb at each airline, and it's easy to see how the political winds are blowing in UA's face. That's why the usual merger playbook that Justice goes by has been essentially tossed out the window. This deal is facing far more scrutiny than normal. That's largely in part to UA's lousy service reputation over the last year. If UA was winning accolades for great service and reliability, I'd bet that there wouldn't be nearly as much concern and opposition by the politicians and Justice regulators. But the perception continues to be that UA has a deeply divided workforce who continue to take out their frustrations on the operation and Senior Mgmt seems unable to take the steps to fix it.

Ultimately, I still feel the deal will be approved. However, I also think (like many others) that it will have to be re-structured from its' present form.


User currently offlineImkeww From , joined Dec 1969, posts, RR:
Reply 2, posted (12 years 11 months 4 weeks ago) and read 1137 times:

Okay, I'm too addicted to this topic... two more since this afternoon.

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REACC1:

WN is also very strong in BWI. Other "low fare" airlines are in US's back yard. (and front yard for that matter)It does seem that there is competition there and it is growing. A predominant part of the east is already proving that competition is alive and well and shows no sign of slowing down. The fear of dominance is myopic. And that is just what it is, fear. ie not real. In the future, what is to stop the "low fare" carriers from on going expansion? It couldn't be a merger. With that in mind I would tend to agree that some political bias is lurking there.
N49921- I'm assuming that HHI is not just about non stop direct flights but conx as well?

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whlinder:

STL-DFW, STL-LAX, SJU-MIA, JFK-SJU are only served by AA and TWA. JFK-MIA is all TWA/AA except for Aerolineas Argentinas and 1 Delta 727. (STL-JFK is actually only TWA)

UA only flies to CLT from ORD. UA only flies to PIT from IAD and ORD. PHL and BWI are served by all 5 hubs (though BWI-IAD/ORD/DEN are not served by US). AA competes on ORD-PHL/PIT. So thats 8 routes (SFO-PHL/BWI, LAX-PHL/BWI, IAD-PHL/PIT, ORD-CLT, DEN-PHL) for UA/US where the only competitor is eliminated, versus 4 for AA/TWA. So therefore it is OK for AA and TWA to merge and DOJ shouldn't even bother reviewing it, but there is no way that UA and US should ever be allowed to merge? Yes the UA/US merger should be more closely scrutinized than AA/TWA, but the wide difference in scrutiny in the reviews of each merger has been preposterous.

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OVer and out.


User currently offlineImkeww From , joined Dec 1969, posts, RR:
Reply 3, posted (12 years 11 months 3 weeks 6 days 12 hours ago) and read 1113 times:

uacaptneil
Member posted 04-26-2001 01:20 AM
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quote:
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Originally posted by ITRADE:
The way DOJ does its analysis of mergers is to look at whether or not the merged entity creates an anticompetitive situation in the marketplace. With regards to airlines, DOJ looks at domestic city to city marketshares. This is called a HHI analysis. What DOJ does is it sees that between DEN and PHL, there are two competing carriers flying the routes non-stop - UA and US. By combining the two carriers, you've eliminated all competition and have created a "concentrated market". If you have enough concentrated markets, you raise anticompetitive concerns (i.e. SFO-BWI, PHL-DEN, IAD-PIT, etc.)
The issue I raised with regards to AA-TW is that of all the U.S. major cities served by the two carriers, only STL-DFW and MAYBE STL-JFK would see a diminishment of service. Compare that to BWI-LAX, BWI-SFO, SFO-PHL, SFO-CLT, SFO-PIT, DEN-PHL, DEN-PIT, DEN-CLT, LAX-CLT, LAX-PHL, LAX-PIT. When you see these markets - all major passenger markets - DOJ raises its eyebrows.

It is not an issue of who has the biggest number of flights in the long run - that is a minor issue. It's the HHI pair analysis.


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Last I checked, there were plenty of open gates for anyone who wants to fly out of DEN to say..ANYWHERE! The problem with this DOJ "analysis" is that it completely discounts what each carrier has spent to build their infrastructure to achieve the gains needed to be successful in a post deregulation environment and is now complaining that two carriers merging creates a competitive problem. However, with the government determining which airports have slots and which do not, they should be able to see that ANYONE that wants to fly ANY of these "problem routes" can do it at ANYTIME. If UAL/U has too many slots at an airport, tell them they have to SELL them. If the DOJ wants to give them to "low cost carriers" tell them to stuff it! The low cost carriers already get enough breaks, let them stand on their own two feet and pay what the rest of the industry is paying for assets!

Just MHO

Neil

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ITRADE
Member posted 04-26-2001 07:07 AM
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quote:
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Originally posted by REACC1:
[Moreover, WN is quite strong in STL and keeps the change in HHI minimal in many of the core TW/AA routes (like LAX or Chicago). I think the DOJ would have had a hard time defending a decision to block this merger on economic grounds.
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WN is also very strong in BWI. Other "low fare" airlines are in US's back yard. (and front yard for that matter)It does seem that there is competition there and it is growing. A predominant part of the east is already proving that competition is alive and well and shows no sign of slowing down. The fear of dominance is myopic. And that is just what it is, fear. ie not real. In the future, what is to stop the "low fare" carriers from on going expansion? It couldn't be a merger. With that in mind I would tend to agree that some political bias is lurking there.
N49921- I'm assuming that HHI is not just about non stop direct flights but conx as well?


[This message has been edited by REACC1 (edited 04-25-2001).][/B][/QUOTE]

HHI is ONLY non-stop markets.


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UAL777flyer
Member posted 04-26-2001 08:49 AM
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Neil,
You bring up an excellent point. Everyone and their mother are complaining that the deck is clearly stacked against the low-cost carriers. That is utterly ridiculous. Have you checked profit margins for those low-cost carriers lately? They're doing just fine and continue to grow and eat away at the market share of the larger majors. Yet, their CEO's cry about predatory tactics and inadequate access to high-density airports ad nauseum. In my opinion, the low-cost, low-fare carriers pose more of a threat to the success of the larger majors than most are willing to admit. But the reason the politicians get behind the "little guys" (especially during elections years) is because they know the public loves those $49 fares!! Personally, I get sick and tired of hearing about how everyone is ganging up on the Southwests, Air Trans, Frontiers and Jet Blues of the world. If you're a major airline, who has taken years to build up your network, market strength and city presence, are you simply going to move aside and allow a low-cost competitor to come in without putting up a fight? Doing so is unrealistic in my opinion. While I don't advocate using illegal tactics, I think it's incumbent upon an airline to defend its' strengths against all competitors. I also think that the reason support seems to be skewed towards the low-cost carriers is because somewhere along the line over the last 15 years the public began to think that bargain basement fares was their right! I agree with Neil. If they want assets and access, let them get in line and take a number. They should not think they are entitled to cut to the front of that line.

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ITRADE
Member posted 04-26-2001 08:54 AM
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quote:
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Originally posted by whlinder:
STL-DFW, STL-LAX, SJU-MIA, JFK-SJU are only served by AA and TWA. JFK-MIA is all TWA/AA except for Aerolineas Argentinas and 1 Delta 727. (STL-JFK is actually only TWA)
UA only flies to CLT from ORD. UA only flies to PIT from IAD and ORD. PHL and BWI are served by all 5 hubs (though BWI-IAD/ORD/DEN are not served by US). AA competes on ORD-PHL/PIT. So thats 8 routes (SFO-PHL/BWI, LAX-PHL/BWI, IAD-PHL/PIT, ORD-CLT, DEN-PHL) for UA/US where the only competitor is eliminated, versus 4 for AA/TWA. So therefore it is OK for AA and TWA to merge and DOJ shouldn't even bother reviewing it, but there is no way that UA and US should ever be allowed to merge? Yes the UA/US merger should be more closely scrutinized than AA/TWA, but the wide difference in scrutiny in the reviews of each merger has been preposterous.

[This message has been edited by whlinder (edited 04-25-2001).]


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Besides the hubs, there probably are additional markets of some consequence (IAD-TPA comes to mind). Moreover, as I've said and what N49921 elaborated furtehr upon, the DOJ will look at the HHI numbers to examine market concentrations. You need not have a single carrier monopoly to raise antitrust concerns; a two carrier duopoly created out of a three carrier situation will raise eyebrows if there is enough concentration created (also known as HHI Delta).

For example, from ORD to PIT, there are about 2000 seats a day. US operates 966; UA operates 727; AA (Eagle) operates 315. The post-merger HHI Delta is 3,483. This is a red flag to DOJ.

From ORD to PHL, there are about 3575 seats a day. UA flies about 1750; AA flies about 1085; US flies about 920. Here, the post-merger HHI Delta is 2,258. Again a red flag to DOJ.

So, while monopoly creation gets DOJs blood flowing, significat market pair consolidation will have the same effect.


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imkeww
Member posted 04-26-2001 09:51 AM
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ITRADE, you haven't answered whindlers comment directly.
What of AA/TW? There's more to be said then them having little competition.

It seems you'd rather have an AA/US than a UA/US. =)

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ITRADE
Member posted 04-26-2001 10:17 AM
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quote:
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Originally posted by imkeww:
ITRADE, you haven't answered whindlers comment directly.
What of AA/TW? There's more to be said then them having little competition.

It seems you'd rather have an AA/US than a UA/US. =)


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Actually I did. Part of the answer lies in the fact that the market dominance of UA/US covers many more significant population centers than does AA/TW. Another part of the answer lies in viable competition at various airports in the two merger scenarios. If you look at STL and LAX, you've got viable third party airlines which could start service if they wanted (UA and WN at LAX) and WN at STL. While both airports are important hubs, they are not the fortresses that are PIT and CLT. DOJ does consider barriers to entry in its antitrust analysis.

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whlinder
Member posted 04-26-2001 10:24 AM
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ITRADE,
You and I have debated this before, and while I respect your views and insight, I still do not believe that UA/US (minus DCA assets) is a major monopoly/anti-trust/anti-competitive problem that should be blocked by the government. Yes there are a few markets and routes where there are problems, but any carrier can enter most of those routes at any time. I don't believe this merger would do as much damage to the competive marketplace as the DOJ/Congress would like people to believe.

I understand your point about consolidation from 3 carriers to two in a market creating a duopoly that raises a red flag to the DOJ, and it rightly should. But did the DOJ bother use HHI to analyze AA/TWA potential market consolidation problems? Like on LAX-JFK? (AA/TWA have 16 flights vs. 11 total UA + DL)

Obviously UA/US creates more anti-trust problems, as US is a bigger airline than TWA. But to heavily scrutinize it while letting AA/TWA sail on through? There is no way the two deals are being treated equally on anti-trust/consolidation issues.

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ITRADE
Member posted 04-26-2001 10:34 AM
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quote:
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Originally posted by whlinder:
ITRADE,
You and I have debated this before, and while I respect your views and insight, I still do not believe that UA/US (minus DCA assets) is a major monopoly/anti-trust/anti-competitive problem that should be blocked by the government. Yes there are a few markets and routes where there are problems, but any carrier can enter most of those routes at any time. I don't believe this merger would do as much damage to the competive marketplace as the DOJ/Congress would like people to believe.

I understand your point about consolidation from 3 carriers to two in a market creating a duopoly that raises a red flag to the DOJ, and it rightly should. But did the DOJ bother use HHI to analyze AA/TWA potential market consolidation problems? Like on LAX-JFK? (AA/TWA have 16 flights vs. 11 total UA + DL)

Obviously UA/US creates more anti-trust problems, as US is a bigger airline than TWA. But to heavily scrutinize it while letting AA/TWA sail on through? There is no way the two deals are being treated equally on anti-trust/consolidation issues.


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I'll make the following points re: the mergers' characteristics.

The AA/TW transaction was a simple buy-out of all the routes, planes, facilities, and systems that constituted the body of TW. It was as straight forward as you could get.

The UA/US deal is a VERY complex operation involving multiple 3d party arrangements, "divestitures", and reorganization. Frankly, I believe that DOJ initially felt that UA was really trying to pull a fast one on DOJ in many regards - the DCAir deal, the intrahub flying, to name two of them. More specifically, industry analyists were in consensus that the original DCAir deal was an absolute sham. When DOJ really looked into the details, it most likely concluded that if UA was attempting to keep its hands in the cookie jar based upon its relationship with DCAir, UA may be attempting to pull other tricks. Hence, one reason for the scrutiny.


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CLT-US
Member posted 04-26-2001 10:36 AM
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UACAPTNEIL and UAL777FLYER--
Amen!!

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LATREAL
Member posted 04-26-2001 10:50 AM
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quote:
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Originally posted by imkeww:
It seems you'd rather have an AA/US than a UA/US. =)[/B]
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That's a no brainer, I'll answer, YES!
But would I want AA to outbid UA's 60 a share?
Hell No.(Can I say that).
Everybody already knows that US was the target of both airlines. You can probably look at it as UAL didn't NEED U, but they were not willing to let AA have it either.
TWA was AA's third or fourth choice and it was going to be sold one way or the other, and AA didn't want DAL etc, to get it and they had to try to keep up with UAL. That's all public knowledge so trying to trick someone into admitting it is useless. It's chess.


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Phasersonstun
Member posted 04-26-2001 10:54 AM
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quote:
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Originally posted by whlinder:
STL-DFW, STL-LAX, SJU-MIA, JFK-SJU are only served by AA and TWA...
[This message has been edited by whlinder (edited 04-25-2001).]


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LUV flies STL-LAX, however STL-DFW is dominated by the new AA.

The DOJ is deeply concerned with several city pairs in the Northeast.

The new UAL would be the dominant and often the only carrier in many markets. e.g. ORD-MDT (Harrisburg, PA... State Capital with fat yields)

ITRADE seems to be dialed in. AMR is being asked to "help out" by flying into some of these markets.

Strategy?

Pass the routes on to "old school" competitors; prevent Air Tran and Jet Blue from operating in the black.

Quid pro quo.




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Lex Passenger
Member posted 04-26-2001 11:14 AM
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Anybody remember ancient history? Like that the DOJ gave thumbs down to NW/CO?
United thought they could put the political marbles together to overcome that precedent.
Doing the DCAir thing was particularly craven, and particularly oriented to the political climate last May.

Let's face it, UA/US is a much bigger threat to competition than NW/CO. AA/TW is a much smaller threat to competition and saved most of a network that otherwise might have died. Result: doubts about UA/US have risen while the economic reality makes the $60 offer price absurd -- so get used to it, this deal as currently structured is gone.

American was smart enough to figure out how to pilfer some silver in the chaos. Smart is as smart does. UA doesn't look very smart right now.

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ITRADE
Member posted 04-26-2001 11:24 AM
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quote:
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Originally posted by Phasersonstun:
LUV flies STL-LAX, however STL-DFW is [b] dominated by the new AA.
The DOJ is deeply concerned with several city pairs in the Northeast.

The new UAL would be the dominant and often the only carrier in many markets. e.g. ORD-MDT (Harrisburg, PA... State Capital with fat yields)

ITRADE seems to be dialed in. AMR is being asked to "help out" by flying into some of these markets.

Strategy?

Pass the routes on to "old school" competitors; prevent Air Tran and Jet Blue from operating in the black.

Quid pro quo.

[/B]


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Secondary and tertiary markets do receive some attention - ABE and MDT being prime examples. That being said, DOJ is particularly concerned with dominance in BIG cities where the passenger loads are in the several hundreds to thousands per day. As Lex Passenger pointed out, DOJ went berserk on the CO/NW deal based on but a few routes - but those routes were all very large business markets and involved fortress hubs.

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quickmover
Member posted 04-26-2001 11:27 AM
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[B] LUV flies STL-LAX

Negative. They fly MCI-LAX, but STL-LAX flights are 1 stops or connections. I'm surprised they haven't started it yet though.




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