TWFirst
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DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 3:58 am

NW/CO/DL issued a joint news release today saying they intend to implement their marketing/codeshare agreement, but will not abide by some the conditions the DOT wants to impose (not the DOJ, but the DOT). As you'll read below, NW/CO/DL are saying:

- The DOT didn't impose similar condition on the UA/US agreement
- The DOJ has approved it without imposing these conditions
- We'll agree to some self-imposed conditions (see below)
- If DOT wants to sue us, go right ahead

I think this will be fun to watch. I hope they give a timetable for implementation soon. The flexibility to earn OnePass miles on Delta will be nice.

Here's the press release:

WASHINGTON, Jan. 21, 2003 – Continental Airlines (NYSE: CAL), Delta Air Lines (NYSE: DAL) and Northwest Airlines (NASDAQ: NWAC) today issued the following response to the U.S. Department of Transportation’s (DOT) notice last Friday proposing to impose certain conditions on the implementation of the carriers’ marketing agreement:

“We have decided to move forward with implementation of our marketing agreement at the earliest possible date. As planned, the three airlines will soon offer reciprocal frequent flyer and airport lounge benefits to consumers, and will begin codesharing as soon as practicable.

“In recent days, we reached agreement with the U.S. Department of Justice on conditions related to our marketing agreement, and we were prepared to accept most of the additional conditions that DOT sought to impose on us. However, some of DOT’s conditions are unacceptable, and we will not agree to them.

“A similar marketing agreement between Continental and Northwest has lowered prices, increased service levels and brought as much as $1.5 billion of annual benefits to consumers since it started in 1998. The marketing agreement among Continental, Delta and Northwest will bring similar consumer benefits, including:

Seamless service to thousands of new markets

Frequent flyer reciprocity, so customers can earn their favorite frequent flyer miles whether they fly Continental, Delta or Northwest

Access to each carrier’s private airport lounges

Increased frequency of flights, and better time of day coverage for travelers

Broader availability of low-priced seat inventory
“Our marketing agreement preserves competition among Continental, Delta and Northwest, since each carrier will continue to independently price, schedule and make all other competitive determinations. The U.S. Department of Justice, the government agency with the principal responsibility and expertise in enforcement of U.S. competition laws, last Friday approved our marketing agreement, subject to conditions agreed to by the carriers with the Justice Department, stating, ‘This alliance agreement, as conditioned, has the potential to lower fares and improve service for passengers in many markets throughout the country.’ The Justice Department concluded that no other conditions were necessary to protect competition or to realize the consumer benefits of the carriers’ marketing agreement. According to the Justice Department’s statement: ‘The alliance can benefit consumers by offering codeshare service to new cities, increasing frequencies or improving connections to cities already served by the carriers, and by permitting frequent flyers to earn and redeem their miles on any participating carrier. Corporations can also benefit from joint bids for contracts from alliance airlines where the airline partners offer complementary rather than competing service.’
“Moreover, the DOT recently permitted a virtually identical marketing arrangement between United Air Lines, the world’s second largest airline, and US Airways to proceed without any conditions imposed by the DOT.

“While the three airlines were prepared to accept most of DOT’s proposed conditions, there are several conditions that are not acceptable. In particular:

Confiscation of ‘underutilized’ gates – the DOT’s proposed requirement that the airlines surrender gates at their hub airports that do not satisfy an arbitrary ‘utilization’ test created by DOT is unacceptable because it is completely unrelated to the marketing agreement, labels normal gate utilization as ‘under-utilized,’ will put at risk the core assets on which the airlines depend to operate their hub-and-spoke networks, raises complex questions about airport financing arrangements, and jeopardizes the ability of the airlines to continue to serve the full scope of communities they now serve.

Limitations on the scope of codesharing – while the airlines are willing to adhere to numeric limitations on the scope of codesharing during the first year phase-in of service, the potentially permanent limitation contemplated by the DOT is unacceptable as it would severely restrict the availability of codeshare benefits to millions of passengers and arbitrarily deprive the airlines of the much-needed economic benefit of the marketing agreement.

Limitations on joint contracts – the proposed restrictions on joint contracts with corporate customers is unacceptable, as it will arbitrarily and severely deprive corporate customers and travel agents of the advantages of the airlines’ expanded codeshare services. It would also arbitrarily and unfairly leave the airlines unable to compete effectively for corporate customer and travel agency business.
“These proposed DOT conditions would undermine the value of the marketing agreement to consumers, and, therefore, to the participating airlines.
“Although the carriers will not agree to certain of the conditions that DOT seeks to impose, Continental, Delta and Northwest have committed nonetheless to:

Release to local airport authorities a total of 13 gates at four of the carriers’ hub airports that become surplus as a result of the carriers relocating their gates in order to make connections between the carriers more convenient for travelers, and offer to release in the future any gates at their hub airports or at Boston that become surplus as a result of similar airport gate relocations related to the marketing agreement

Restrict for a one-year period the total number of new domestic, Canadian and Caribbean codeshare flights between Northwest and Delta and between Continental and Delta to 650 flights per two carrier codeshare (for a total of 2,600 flights), and specify that at least 391 of each marketing carrier’s new codeshare flights (a total of 1,564 flights) must be to or from underserved or small airports, with a provision to notify the DOT if the carriers desire in the future to increase the number of those new codeshare flights

Restrict three-carrier joint bids for corporate or travel agency contracts to those companies that request them; prohibit joint bids to companies headquartered or with a principal place of business in a carrier’s hub city or other cities for domestic service originating from that city if the combined market share of the three carriers exceeds 50 percent at that city, and restrict the content of joint bids unless otherwise requested by the company or in a good faith response to a competitive bid.
“None of these additional commitments was required by the Department of Justice when it approved the carriers’ marketing agreement last Friday, nor were similar conditions imposed by DOT when it approved a virtually identical agreement between United Air Lines and US Airways. None of these additional commitments is necessary to preserve competition as part of the carriers’ marketing agreement, which is designed to maintain the competitive independence of each of Continental, Delta and Northwest. Nonetheless, each carrier has made these commitments during the pendency of any enforcement proceeding brought by DOT.
“Now that DOT’s regulatory review period has terminated, Continental, Delta and Northwest intend to move forward with implementation of their alliance (subject to the commitments outlined above).

“Our marketing agreement fully complies with applicable law. Should DOT bring an enforcement action regarding the marketing agreement, the carriers intend to defend their marketing agreement vigorously while continuing to implement it, in order to protect the pro-competitive, pro-consumer benefits identified by the Justice Department, and to prevent the DOT from placing Continental, Delta and Northwest at a competitive disadvantage during a time of unprecedented crisis in the airline industry.”

Attached to this press release is a letter from the three carriers to the Department of Transportation dated Jan. 21, 2003.

Contacts:
Continental Airlines, Corporate Communications, 713 324 5080
Delta Air Lines, Corporate Communications, 404 715 2554
Northwest Airlines, Corporate Communications, 612 726 2331

An unexamined life isn't worth living.
 
scottysair
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 4:32 am

Great!! Keep it up for more news for me into the a.net. When will be began for the codeshare into Spring 2003? Can you please let us know find out exact want to know more news for codeshare beginning into DL/NW/CO into skyteam alliances. Please let us know! Thanks!

Regards!
 
deltairlines
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 4:42 am

Good news! I too, thought that the DOT overstepped its boundaries here, as 650 flights is not that many for each of these airlines, who operate at least 3000 flights daily. While I do think that consolidating gates is good, I don't think the DOT should force these airlines to give up a gate. Once again, it is government getting involved in the private sector; I guess that's what happens when you have a democrat running the DOT (yes, President Bush did put a democrat in at the DOT).

Jeff
 
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 5:33 am

This represents a bold new stance by U.S. majors. The government has radically overstepped its bounds here, as the DOT does not have the authority to impose the conditions they've attempted to set.

Since the DOJ (which DOES have this authority) approved the agreement without condition, that will stand as the precedent for the agreement going forward.

Way to go CO/DL/NW!  Big grin
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
Delta737
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 5:34 am

Actually, Norman Mineta's from the last administration. Also, his two sons are airline pilots too one of which was my college roommate

Norm's a good guy.

There are a lot more things 'in play' than you might realize or read about in the popular media.

Doug Taylor
 
deltairlines
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 5:51 am

Doug: Norman Mineta was the Secretary of Energy (IIRC) under Clinton, but Bush appointed him to be Sec. of Transportation. He is currently the only democrat in the Bush cabinet.

I must keep the idea that the DOJ should be in charge here on anti-competitive portions. While the DOT may make suggestions, the role of the Attorney General is to watch out for anticompetitive behaviour.

Just my two cents.

Jeff
 
deltairlines
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 5:54 am

Just one more comment on when codesharing begins: The president of Northwest said today that he sees codesharing starting this summer, so I would assume Q3 2003.

http://biz.yahoo.com/djus/030121/1448000891_1.html

Jeff

[Edited 2003-01-21 21:56:29]
 
gigneil
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 6:06 am

Hmm. I think what they're failing to see is that their alliance will be much larger than either US/UA or AA by themselves. They require some restrictions.

I'm sure the DOJ will rush to the defense of the DOT in this matter.

N
 
scottysair
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 6:11 am

Man, This is awesome for codeshare will be began into summer 2003. This is wonderful to hear for the DL/NW/CO. I will able use more with my Skymiles into Delta fly on codeshare with NW/CO someday for myself. Someday that I will flew to DTW for connecting into new terminal soon. Well, talk ya later!

Regards!

PS. Way to go, NW/DL/CO!  Big thumbs up
 
Delta737
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 6:26 am

Actually, he was secretary of Commerce under President Clinton but was appointed as Secretary of the DOT in 2001.

I mean not to nitpick, but I didn't throw the first stone  Smile

Doug Taylor
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DCA-ROCguy
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 6:37 am

The legal haggling over the conditions of the DL/CO/NW alliance is merely chasing after a horse that's out of the barn. Neither the UA/US nor the DL/CO/NW alliance should have been approved by DOJ at all. The six Cartel-network carriers should *not* be allowed to concentrate any more market power. It's well known that they still want to consolidate, which would be a disaster for consumers and communities. DOJ needs to send a firm message: let the marketplace and financial community sort out which Cartel carriers survive. The market, even with post 9/11 conditions, will support more network carriers than the network carriers want there to be.

But DOJ gave DL/CO/NW an inch, so they're taking a foot. Both alliances should be canned by the Feds immediately, but of course they won't be. At this point, all DOT can do is sue for enforcement of the conditions and appeal for DOJ assistance. If DL/CO/NW go head as they plan, if they lose the case they should be sanctioned. The Federal government has the legal right and obligation to protect competition, and both of these alliances are anticompetitive.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
DCA-ROCguy
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 6:44 am

Any wrangling over conditions for the DL/CO/NW alliance is simply chasing after a horse that's out of the barn. DOJ should not have approved either the UA/US alliance or this one. The Cartel-network carriers should not be allowed to concentrate any more market power, regardless of their financial condition. They want to consolidate down to fewer airlines than the market can support, in order to better gouge uppity communities that now have choices. These alliances are a way to smooth the slope into that pit.

Nevertheless, DOT ought to sue; a rear-guard action is better than none. If they win, they ought to sanction DL, CO, and NW vigorously.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
ConcordeBoy
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 6:55 am

Nevertheless, DOT ought to sue; a rear-guard action is better than none. If they win, they ought to sanction DL, CO, and NW vigorously.

Many of the media are reporting that the DOT may just do nothing on this issue.... but rather wait and give all three airlines the finger once they apply to codeshare internationally (which, if denied... would make this cooperation utterly useless for myself, and I'd imagine many others)
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DCA-ROCguy
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 9:39 am

Sorry about the double post...my computer told me it ate the first one, so I wrote the second from scratch. Sometimes the machine does that--says it didn't get through to a website, and then did. Weird.

Reuters just reported that DOT will take DL/ CO/ NW to court to enforce the conditions.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 11:01 am

I can just see this circulating at the headquarters of the three carriers involved:  Big grin


To: Norman Y. Mineta, Secretary, U.S. Department of Transportation

From: Gordon Bethune, Chief Executive Officer, Continental Airlines, Inc.

Subject: Proposed court action to enforce conditions imposed by DOT


Dear Mr. Secretary,

Don't make our attorneys bitch-slap you!

Hugs and kisses,

Gordon




"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
flashmeister
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 11:22 am

Nevertheless, DOT ought to sue; a rear-guard action is better than none. If they win, they ought to sanction DL, CO, and NW vigorously.

Enough already! I still fail to see the rationale of quasiregulation of the aviation industry. This alliance is not anti-competitive or anti-consumer. In fact, it could be argued that these sorts of alliances are exactly what large network carriers SHOULD be doing to save themselves, the jobs of their employees, the economies of their hub/focus cities, and air service to smaller communities.

The alliance will give Delta, Northwest, and Continental far greater latitude to provide some service to more people, rather than reducing service all around and potentially dropping some cities from mainline -- or even regional -- service altogether.

A particular market must make itself attractive to the airlines to get service. As the three airlines plan together, the criteria that a market must meet to be 'attractive' is suddenly less burdensome. Granted, there may only be service on a single carrier, but if that's what the market bears, so be it.

And, if a city really is fed up with their airline options, they can always put together a travel bank and go shopping. It's done all the time nowadays, and there's no shame in it.

The government's role is not to nitpick businesses into quasiregulation, as others here have suggested. Let each market be a true market -- otherwise, what's the point? Why be in business if you're just going to have to succumb to governmental paranoia and micromanagement? If the government wants to manage an airline... let it start one itself.
 
TWFirst
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 11:26 am

Here's the link to the Reuters article. Sounds like both sides are posturing big time and preparing for a good old-fashioned showdown.

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=2084355
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usairways85
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 11:28 am

So i am assuming if DL/NW/CO successfully disregard the restrictions put on them that UA/US will try to do disregard the restrictions put on their alliance as well.
 
speedport
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 1:08 pm

"...UA/US will try to do disregard the restrictions put on their alliance as well."

Good point Usairways85. What's good for the goose and all that.

Actually, this fight is happening much faster than I thought it would. I posted on an earlier NW/DL/CO thread that they would start out slowly and then jump the restrictions. I guess things for NWA, DAL and COA are much worse than I imagined. No time to lose is the new industry slogan. Reminds me of that old Monty Python sketch.

I find it funny how employees at the three think that this alliance will save jobs. There will be a great loss of jobs as these three intend to streamline their operations. Why else would they spit in the face of the DOT? With over 3200 overlapping routes it is easy to see that capacity and job cuts are on the horizon.
 
flashmeister
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 1:32 pm

I find it funny how employees at the three think that this alliance will save jobs. There will be a great loss of jobs as these three intend to streamline their operations.

Well, what would you prefer: potential for job reductions through streamlined operations or surety of job reductions due to losses and enduring financial problems?

At least with one there's a potential upside and the prospect of losing jobs isn't as sure. The other is a sure bet.
 
DCA-ROCguy
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 2:21 pm

The government's role is not to nitpick businesses into quasiregulation, as others here have suggested. Let each market be a true market -- otherwise, what's the point? Why be in business if you're just going to have to succumb to governmental paranoia and micromanagement? If the government wants to manage an airline... let it start one itself.

Trouble is, air travel is a public good....it is too vital to the economies of too many places to be left entirely to the whims of airline executives who don't give a rat's tail about the communities they serve. History indicates without question that whenever the high-cost Cartel-network carriers are allowed to concentrate power, they use it to destroy and gouge.

This is not opinion or speculation. It is fact backed by the experience of many fast-emptied wallets and corporate travel budgets. And many abandoned communities. Without public pressure and observation, only the highest-yield destinations and passengers would get service. Southwest can't reach smaller cities. That means enough network carriers and their regional affiliates, strong in different regions, and not big enough to destroy low-fare carriers.

These alliances are simply a backdoor way to move towards what the network carriers are salivating for, and what Congress and DOJ and DOT should fight to the last man...consolidation. That would mean three network carriers when the dust settles. The US economy can support four or five network carriers if they are properly managed. Saving service to smaller cities, and airline jobs, requires making the airlines act like businesses and compete, instead of allying, and ultimately buying each other out and divvying up the country for sky-high fares.

Medium-size cities in particular have NOT forgotten the 1990's, and we aren't going to forget anytime soon.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
artsyman
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 6:44 pm

"...UA/US will try to do disregard the restrictions put on their alliance as well."

The reason that DL/CO/NW are complaining is that the restrictions that were put on them were not put on the UAL/US alliance. So above isnt that relevent

Jeremy
 
usairways85
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 8:57 pm

Yes it is, because if DL/CO/NW can successfully disregard their restrictions then what is stopping UA/US to disregard the restrictions put on them, regardless whether the restrictions are even close to being the same.
 
LHSTR
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 10:02 pm

I hope you all enjoy paying higher fares!
 
TWFirst
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RE: DL/CO/NW To Implement Agreement Despite DOT

Wed Jan 22, 2003 10:34 pm

A very good article in the Minneapolis Star Tribune today entitled "NWA, Delta, Continental Defy Feds"...

http://www.startribune.com/stories/535/3604879.html
An unexamined life isn't worth living.
 
LAXFlyer
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Re: Speedport Aka Speedbump, The Village Idiot.

Wed Jan 22, 2003 10:38 pm

Things are much worse for us then you imagined Speedbump? What would you base that on? Please enlighten me and others here. If I were you toots I'd worry about my own airline instead of posting your usual, I hate CO, NW, DL comments. Trust me Miss vast wealth of unknowledge, no matter how bad you think or wish things are at CO, NW, DL, they are no where near as bad as the mess at UA. By the way, I hear your going to have even larger paycuts. Worry about your own company Miss Charm Free and will worry about ours.
 
flashmeister
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RE: DL/CO/NW To Implement Agreement Despite DOT

Thu Jan 23, 2003 6:21 am

That would mean three network carriers when the dust settles. The US economy can support four or five network carriers if they are properly managed. Saving service to smaller cities, and airline jobs, requires making the airlines act like businesses and compete, instead of allying, and ultimately buying each other out and divvying up the country for sky-high fares.

If they want to merge, let them merge. If people are so pissed off about high fares, then a business opportunity will develop and an entrepreneur will fill it, like Southwest did, and AirTran, jetBlue, and Frontier all have post-deregulation. Let the marketplace manage itself rather than having the government step in and decide who gets to charge what for a particular product (something that the government knows precisely zero about).

This really boils down to artifically lowering prices in markets that aren't attractive for a lot of competitive service. You know, there are advantages and disadvantages to big-city vs. small-town life, and one of the disadvantages of small-town life is that you can't get some things out in the boonies that you can in the city. One of those things, much of the time, is dirt-cheap airfare. Yes, it sucks, but that's life. You choose to live in the wheat, so don't gripe when you have to deal with some of the cons of that choice.

Life is not fair. Not everyone has access to everything. Rather than whine and bitch about not getting decent service, why not focus on making your market more attractive and going out and drumming up some service on your own. Too many people are prone to rely on government to take care of problems that are best solved on their own.
 
IAHERJ
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RE: DL/CO/NW To Implement Agreement Despite DOT

Thu Jan 23, 2003 6:25 am

CO/NWA have been in a very close codeshare since 1998 and the same job security for empoyees type of issues were brought up then. There were no cuts in service by NWA or CAL and nobody lost their job as a direct result of that successful codeshare. With Delta joining the lineup, yes there will be overlap however the codeshare agreement between the three actually encourages the airlines to grow and increase market share. NWA has more support behind launching service across the Pacific with CO/DL feeding traffic on their 747 while Continental can continue to focus on Latin America and Mexico knowing that it has the support of Delta feeding passangers through IAH to COEX/CAL jets to destinations South of the border. Delta will fight off the LCC's on the East Coast and continue to offer transatlantic service knowing that NWA will not need to develope a PHL hub or something similar. Yes employees get worried but history has shown that this will be a positive thing over the next few years and if it means additional revenue for our respective carriers right now, then it's a win win for both management and labor.

IAHERJ
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speedport
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RE: DL/CO/NW To Implement Agreement Despite DOT

Thu Jan 23, 2003 6:49 am

"Worry about your own company Miss Charm Free and will worry about ours."

Talk about striking a nerve. Thank you for providing my point. Anyone who would react to my post the way you have must be shaking in their boots. Ignoring the future will not make it go away. Pretending that everything is rosy will not make it so.

Do you really think 3 airlines would form an alliance, knowing they have over 3200 overlapping routes, and not plan capacity cuts? Of course you do, because you have chosen to be willingly ignorant of the obvious.

PEOPLE DON'T FORM ALLIANCES TO COMPETE WITH EACH OTHER!

Why do you think the DOT put a restriction on the airlines not to drop service to certain markets? Why do you think the DOT put a restriction on the airlines not to code share into their hubs? WHY DO YOU THINK THE AIRLINES TOLD THE DOT TO GO SCREW ITSELF?

No wonder you are so pleased with yourself, ignorance truly is bliss.

Laxflyer? More like Lax-ostrich.

One last thing, I have nothing against DAL or NWA. As for COA...need I say more. No, I guess not. Besides, who wants to sink to your childish level.
 
speedport
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RE: DL/CO/NW To Implement Agreement Despite DOT

Thu Jan 23, 2003 7:13 am

"CO/NWA have been in a very close codeshare since 1998...There were no cuts in service by NWA or CAL"

Hello? That was a time of industry expansion. In case you haven't noticed we are now in a time of industry contraction. Didn't Gordo recently say that UAL should go away because this would cure the OVER CAPACITY plaguing the industry.

I am sensing a pattern among COA employees. No wonder you all like Gordon so much. He has taught you how to listen to what he says without thinking about what it means.
 
jhooper
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RE: DL/CO/NW To Implement Agreement Despite DOT

Fri Jan 24, 2003 4:27 pm

Last semester, I wrote a paper on airline deregulation for my Antitrust Economics course. While I didn't address codesharing directly, I did address mergers (a more drastic move). I quote a passage of the paper here, using Professor Steven Morrison as a source.

A final concern for policy makers involves mergers because they are concerned about anticompetitive motives. During regulation, merger requests were routinely denied; however, since deregulation there have been waves of airline consolidations. Data has shown that pre-merger fares have usually exceeded post-merger fares, however, it is not clear whether these mergers prevented fare wars which would have kept fares lower than post-merger fares. Generally, operational and financial motives have accounted for 72 percent of mergers. These motives include taking advantage of economies of scope and increased synergies, and have resulted in increased welfare. Industry forces have accounted for 22 percent of mergers, and only six percent of mergers were attributed to anticompetitive motives.

If you're interested in reading the full report along with the sources I used, you can go to http://www.geocities.com/germb777. There are things that can be done to make airlines more competitive, but my research indicates that preventing these agreements really shouldn't be one of them.

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