Matt D
Topic Author
Posts: 8907
Joined: Fri Nov 19, 1999 6:00 am

Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 12:22 pm

I'm truly amazed at how many people actually support the proposed US/DL merger. Maybe their stock went up as a result, maybe they just foam at the thought of spotting and photographing Airbus equipment in Delta colors. Who knows.

But what I fail to see is what POSSIBLE good can come out of all of this?

The most common justification I hear in support of an oligopolistic market is "overcapacity".

Oh really?

Then maybe one of you can explain to me why planes, from little CRJ's all the way up to 777's are all flying full. What is the average? 75, 80%?

And that's not good enough?

As some other people....who unfortunately got flamed for saying this....revealed the REAL issue.

It isn't overcapacity.

It's an outdated business model. Starting from the top and and all the way down from CEO's who are so clueless as to what is really going on-both from a customers as well as a front line employees point of view...that they might as well be in the Twilight Zone....to pilots and FA's that will still fight to the death their "right" to protect their Seniority Lists and other hideously archaic and obsolete mindsets. You are indeed PART OF THE PROBLEM. And please spare me the "you don't know what it's like in THIS business" rhetoric, which is usually a sign of someone who has no argument otherwise. I've worked in the private sector for many years, and have had to deal with ups and downs just as you have.

Now yes, let the record show that you have had to take many deep cuts in pay and bennies lately....and the lifestyle you've become accustomed to has been threatened....if not already eliminated. And I feel your angst.

But did you REALLY think it was a sustainable system in the first place?

Go ask any number of Auto Factory workers in Detroit about what a mile-long list of benefits, pensions, wages, and seniority lists got THEM.

Anyway, getting back on track. Let's assume that you "consolidation" hopefuls get your wish: that the number of airlines in this country drops from the current 20 or so down to about 5 or 6.

The number of furloughs and job cuts that will inevitably result as a result of eliminating redundant roles as well as abandoning so-called "marginal" routes is a number that I don't even want to think about.

But all is not lost. Things are cyclical in this business. A few names will vanish. Planes will be parked. Cities will be begging for service. And the public will tire of the lack of service and fares that will once again skyrocket due to the lack of competition.

So eventually we'll see a whole new crop (Round Three) of new upstart carriers flying a handful of routes, mostly with old, junky used second and third hand planes. And nearly all of them going out of business within two years.

So there's something that surely must be a brighter future than now: Get laid off by Delta in 2007. Get hired by Acme Air in 2009, flying 737-200's. Then after they go under in 2010, accept that FO position flying MD-80's for Thrifty Jet in 2012. Then after you get pink slipped by THEM folding in 2013, there's that new startup flying SAAB 340's out of CID you can apply to......

I think you get the picture.

Of course if you manage to be one of the lucky ones who is with Delta....and is STILL with Delta 20 years hence, you should kiss the tarmac at ATL every night and thank your lucky stars.

'Cuz most of you guys won't be that fortunate if you really get your wish vís-a-vís consolidation.

Like I said....be careful of what you wish for. You just might get it.

THEN who you gonna blame?
 
User avatar
Stitch
Posts: 22931
Joined: Wed Jul 06, 2005 4:26 am

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 12:28 pm

I imagine a great deal of "support" from the passengers is in the interests of protecting their own elite status and frequent flier miles. If DL liquidates, they lose that "investment" and have to start all over again.

Also, with the majority of them earning that status and those miles on the "company dime", higher fares don't really come into play, since when they travel for leisure, they use the miles.
 
satx
Posts: 2771
Joined: Mon Apr 11, 2005 7:26 am

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 12:37 pm

I'll still wish for it.

From what I understand flying does a lot of damage to the environment, even more damage per seat than driving an American-sized vehicle. Thus, I really don't mind if they consolidate down to five or six airlines and double/triple/quadruple the current fares and drop all of the 'barely worth it' cities. As long as it helps cut down on all this runaway pollution I'll be fine with it.

My job isn't any safer than anybody else's and I don't have a golden parachute or a union or anybody else to help me out. I know that I can be out on my ass just like anyone else if the market takes a seriously extended dive. I guess that's just life?
Open Season on Consumer Protections is Just Around the Corner...
 
Matt D
Topic Author
Posts: 8907
Joined: Fri Nov 19, 1999 6:00 am

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 12:41 pm

Well I'll give you credit: that's definitely an original argument: Save The Planet through industry consolidation.

Now tell me....does that apply to everyone incl all of the Euro airlines that come and go and the Asian airlines that have been sprouting up like crab grass, or is it just the American ones that need to go?
 
satx
Posts: 2771
Joined: Mon Apr 11, 2005 7:26 am

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 12:54 pm

Quoting Matt D (Reply 3):
Now tell me....does that apply to everyone incl all of the Euro airlines that come and go and the Asian airlines that have been sprouting up like crab grass, or is it just the American ones that need to go?

I support world-wide consolidation.
Open Season on Consumer Protections is Just Around the Corner...
 
MD-90
Posts: 7835
Joined: Mon Jan 17, 2000 12:45 pm

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 1:04 pm

Quoting SATX (Reply 4):
I support world-wide consolidation.

But it sounds like what you really support is controlling other people based upon how you think they should be allowed to spend their own money. And of course government exists to enable certain people to control many others.

[Edited 2006-11-17 05:07:42]
 
commavia
Posts: 9635
Joined: Mon Apr 25, 2005 2:30 am

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 1:07 pm

Quoting Matt D (Thread starter):
I'm truly amazed at how many people actually support the proposed US/DL merger.

I'm fully supportive of the merger, but only because I believe that public companies in a competitive capitalist market economy should be allowed to merge and consolidate as they wish. Especially as history in the airline industry shows, most mergers end up being disasters for the airlines involved anyway, so long-run, I really don't see how this poses much of a threat to American consumers.

If the merger goes off without a hitch (which I doubt), then great. If not, the AmericaWestUSAirwaysDelta frankenstein crumbles, and somebody else -- probably Southwest, AirTran, JetBlue, Frontier, etc., or a combination -- will fill the void.

In the long-run, everything works itself out.
 
dank
Posts: 925
Joined: Thu Jul 20, 2006 11:35 am

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 1:14 pm

Quoting Matt D (Thread starter):
Then maybe one of you can explain to me why planes, from little CRJ's all the way up to 777's are all flying full. What is the average? 75, 80%?

It's not just load factors that determine if there is overcapacity. You also have to look at yields. Airlines can end up filling seats by lowering prices to fill them. Prices are still pretty cheap in my experience (even with fuel costs being high).

I'm not saying that consolidation is the be all, end all. Just that saying the airlines are filling up seats doesn't mean that there isn't overcapacity.

cheers.
 
ARGinLON
Posts: 550
Joined: Wed Jun 22, 2005 6:26 pm

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 1:17 pm

Quoting Matt D (Thread starter):
Then maybe one of you can explain to me why planes, from little CRJ's all the way up to 777's are all flying full. What is the average? 75, 80%?

There is over capacity and fares are not in line with inflation neither with oil prices. In many markets planes are full due to incremental demand coming from unrealistic fares and flights are only kept for market share issues.

A typical example will be the FL market from the NY area: Too many flights too cheap resulting in over capacity and unprofitable routes.
 
MD-90
Posts: 7835
Joined: Mon Jan 17, 2000 12:45 pm

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 1:35 pm

Quoting ARGinLON (Reply 8):
A typical example will be the FL market from the NY area: Too many flights too cheap resulting in over capacity and unprofitable routes.

I'm sorry, but that's just ignorant. Airlines do not fly money-losing flights unless they have a specific reason. There have been mistakes made, and pride has cause many airline execs to make bad decisions (particularly cutting back on unprofitable routes), but Florida is a moneymaker.

Quoting Dank (Reply 7):
Just that saying the airlines are filling up seats doesn't mean that there isn't overcapacity.

Analysts like Mike Boyd, who can sell his group's aircraft forecast product for $2950 and businesses actually buy it, seem to disagree with you in regarding the American airline system.
 
DesertAir
Posts: 1255
Joined: Sat Jan 28, 2006 1:34 am

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 9:02 pm

I am no in favor of the mergers or mergers in general. Airlines seem to have very little financial sense. They serve unprofitable routes and ego-striveto be world-wide mega carriers. For those of us who fly domestic coach-their is minimal difference in service between the carriers. A seat is all you get, some a bit more confortable than others, some crews a bit more pleasant than others. Part of the magic of flying has always been the differnt airline companies and their unique service and route system.
 
WDBRR
Posts: 599
Joined: Tue Jan 25, 2005 11:28 am

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 9:16 pm

It's amazing how things go in cycles.
20 years ago, there was much consolidation
and now it may all happen again the same way.

Western into Delta.
Republic into Northwest.
Ozark into TWA now AA.
Frontier (orginial) into People Express
People Express into Continental.
New York Air into Continental.
Eastern into Texas Air.
Piedmont into USAir.
AirCal into American
PSA into USAir

Did I miss any others??
 
User avatar
ZSOFN
Posts: 1379
Joined: Fri Jun 24, 2005 5:20 pm

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 9:17 pm

Quoting Matt D (Thread starter):
Then maybe one of you can explain to me why planes, from little CRJ's all the way up to 777's are all flying full. What is the average? 75, 80%?

Load factor is not synonymous with yield, and it is yield that truly determines capacity. If you were to ditch aircraft and frequencies, average ticket prices would rise as competition for those seats increases. Sure, you can fill thousands of seats, but you have to offer rock-bottom prices in order to do so. With less seats on offer, fares are allowed to rise and reflect the true cost of air travel.
 
WDBRR
Posts: 599
Joined: Tue Jan 25, 2005 11:28 am

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 9:23 pm

Quoting ZSOFN (Reply 12):
Load factor is not synonymous with yield, and it is yield that truly determines capacity. If you were to ditch aircraft and frequencies, average ticket prices would rise as competition for those seats increases. Sure, you can fill thousands of seats, but you have to offer rock-bottom prices in order to do so. With less seats on offer, fares are allowed to rise and reflect the true cost of air travel.

Well if airlines start cutting flights and fares go up,
I am sure an LCC will see it as an opportunity and
move in and offer the same flights at lower fares.
it would just give more market share to the LCC's.
 
ltbewr
Posts: 12361
Joined: Thu Jan 29, 2004 1:24 pm

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 9:57 pm

I am concerned as many here as to the consolidation of the airline industry in the USA for it's affects as to fares, employment numbers, pay and benefits to it's employees, quality and quanity of service, especially at peak demand times.
We are ending up in the USA with a 3 tier system. Top would be the traditional airlines including DL, UA, CO and AA. The middle tier would be speciality and regional airlines like Midwest and Alaska. The lower tier would be the lower fare/lower cost airlines including JetBlue, Southwest and Frontier. Hopefully the low or lower cost carriers will prevent the airfares from becoming excessively high, but even they will increase their fares as well as fewer seats will be available overall. That is a problem we may see soon in Europe and Asia.
Perhaps too many of us got spoiled with unsustainable low airfares by the deregulation boom throughout the world over the last almost 30 years and now a new normal is about to exist as to airfares being more realistic as to business side of airlines.
 
halls120
Posts: 8724
Joined: Sun Jun 05, 2005 3:24 am

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 10:01 pm

Quoting MD-90 (Reply 5):
Quoting SATX (Reply 4):
I support world-wide consolidation.

But it sounds like what you really support is controlling other people based upon how you think they should be allowed to spend their own money. And of course government exists to enable certain people to control many others.

This "air travel is destroying the environment" argument is one of the newer slogans from the enviros, and it has sort of a luddite ring to it, doesn't it? In SATX's world, only the rich and powerful get to fly, leaving the unwashed masses to stay at home and fold their shopping bags for reuse and be content.
"Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." Mark Twain, a Biography
 
ARGinLON
Posts: 550
Joined: Wed Jun 22, 2005 6:26 pm

RE: Be Careful Of What You Wish For: Consolidation

Fri Nov 17, 2006 10:52 pm

Quoting MD-90 (Reply 9):
I'm sorry, but that's just ignorant. Airlines do not fly money-losing flights unless they have a specific reason. There have been mistakes made, and pride has cause many airline execs to make bad decisions (particularly cutting back on unprofitable routes), but Florida is a moneymaker.

So an university student is calling me ignorant? Who do you think you are? You must be more careful with what you say to an adult who is way more aware of this industry than you are.

Now listen and learn:

Nobody makes money from the NY area to MCO and FLL year round (as an example) since all that capacity was added in the last few years. There is way too much capacity and B6 has been driving fares way too low in order to make money year round. Do you think anybody makes money when B6 sells RSWJFK at USD79? Sure, in the summer very few pay that but year round that fare is widely available.

know why they keep flying? Because of market share issues. Airlines today must keep a significant presence in certain popular routes to mantain MS in others.

Now go back to the campus.
 
airbazar
Posts: 6799
Joined: Wed Sep 10, 2003 11:12 pm

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 1:09 am

Quoting Matt D (Thread starter):
Then maybe one of you can explain to me why planes, from little CRJ's all the way up to 777's are all flying full. What is the average? 75, 80%?

They're full because prices are cheap. Prices are cheap because there's too much capacity and airlines must operate with rock-bottom yields in order to fill up all those seats. While ticket prices have been going down over the last 20 years everything else has gone up in price, from fuel to labor costs. So as you also pointed out, the industry is stuck in a unsustainable path. The only way to get out of it is through consolidation and reorganization, i.e. less capacity and lower operating costs.
 
Jaws707
Posts: 667
Joined: Mon Aug 06, 2001 10:45 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 1:58 am

Compare the airline industry to the railroads. The railroads used to suffer from the same probelems such as overcapacity, but they merged and we are now down to about 4 major RR's with some smaller ones. Now the 4 majors, BNSF, CSX, Norfolk Southern, and Union Pacific have very little competiton as they mainly operate in different parts of the county. It's been great for them as they now make TONS of money, but shipping has become more expensive. I believe thats what will happen with airlines. We cannot constantly have airlines going into bankruptcy, and there is definately overcapacity. Any industry that cannot make money for 5 yrs with a couple of exceptions such as Southwest and Jetblue, means the business models are flawed. When oil is $60-$70 a barrel, airlines cannot offer $39 fun fares. It just doens't work. I predict some mergers to take place and the price of flying will go up. Airlines are in the business of making money and they must adapt their business models to do this.
 
commavia
Posts: 9635
Joined: Mon Apr 25, 2005 2:30 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 2:23 am

Quoting Jaws707 (Reply 18):
but they merged and we are now down to about 4 major RR's with some smaller ones. Now the 4 majors, BNSF, CSX, Norfolk Southern, and Union Pacific have very little competiton as they mainly operate in different parts of the county. It's been great for them as they now make TONS of money, but shipping has become more expensive

That's not the whole story. Another major component of rail logistics and transportation costs increasing over the last 5-10 years is that demand has shot up. Overland transportation by rail is becoming more and more attractive -- and cost competitive -- as alternative means (air, truck, etc.) become less economically viable due to increasing fuel costs. A market price is determined by two things -- supply and demand. Sure, the mergers of the rail companies affected supply, but the market environment is shaping demand.

Quoting Jaws707 (Reply 18):
Any industry that cannot make money for 5 yrs with a couple of exceptions such as Southwest and Jetblue, means the business models are flawed

It doesn't mean the business models of all the airlines are flawed. What it means is that when everyone is paying $75 for a barrel of oil, except two or three who are paying $40, the $40 company sets the market floor on prices. That is, indeed, exactly what has happened in the U.S. over the last five years. Following 9/11, the legacy carriers had to sell off their fuel hedges to (successfully or unsuccessfully) avert bankruptcy and free up liquid cash, and as such, were left completely exposed to the stratospheric spike in jet fuel prices since 9/11. Also during this time, they transformed their operations and reworked their networks to better fit the new environment, but all of these efficiencies were wiped out by the spike in energy costs. Southwest has remained profitable because they've had the fuel hedges, and thus were able to price profitably at a level that no other airline could financially compete with. Meantime, every other airline has been forced to match the prices, and thus lost money. Not all the airlines' business models are flawed -- it is quite telling that if fuel prices were where they were in 2000, both American and Continental, as just two examples, would be reporting all-time record profits.

Quoting Jaws707 (Reply 18):
When oil is $60-$70 a barrel, airlines cannot offer $39 fun fares. It just doens't work

Southwest can, because they are not paying $60-70 a barrel. They're paying $35-45. For now. The hedges are starting to expire, and thus their fares (and the industry's overall) are starting to come up.

Quoting Jaws707 (Reply 18):
I predict some mergers to take place and the price of flying will go up

Indeed. This is likely how the industry will proceed over the next five years.

Quoting Jaws707 (Reply 18):
Airlines are in the business of making money and they must adapt their business models to do this

Well, I'm not sure if I'd agree with you that airlines are pr have ever been "in the business of making money."  Smile

However, while everyone says the airlines need to "adapt their business models," some lose sight of the fact that several U.S. legacy carriers -- namely American and Continental -- have dramatically adapted their business models and have achieved unprecedented restructurings since 9/11. Their continued financial difficulties are now purely -- 100% -- because of fuel prices.
 
JetBlueGuy2006
Posts: 1482
Joined: Wed Jan 11, 2006 5:38 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 2:31 am

Quoting Stitch (Reply 1):
If DL liquidates

I just don't see that happening. I think that they will eventually emerge from bankrupcy as an independant airline with a solid business plan. They will also continue to expand international service and continue to grow stronger through their Skyteam alliance and regional feeders.

Just my .02
Home Airport: Capital Region International Airport (KLAN)
 
surfdog75
Posts: 239
Joined: Thu Nov 17, 2005 5:39 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 3:10 am

Two big reasons for the attempted takeover:

#1 - Parker and his cronies are greedy SOBs. He just sold 9 mil in stock in August while paying some of the lowest wages in the industry. They stand to make a huge fortune here.

#2 - He scared of what an emerging Delta will do to his airline. They will come out lean and mean with the a great route structure, low costs, clean airplanes, state of the art on-board entertainment, and down home service then eat his company for lunch while he's still trying to figure out how to integrate the US/AWA mess.

Overcapacity is a myth that the deal-makers who stand to make a fortune love to perpetuate. Planes are full, oil is down, and the population is growing. If you reduce capacity it will just pop up again to fill the need that is there. Southwest, Jet Blue, Airtran etc will be the beneficiaries.

They are basically trying to take out a competitor before it can take them out. It's a highly anti-competitive scheme that the DOJ/Congress will kill if it doesn't die sooner.

[Edited 2006-11-17 19:11:43]

[Edited 2006-11-17 19:16:21]
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 3:57 am

Quoting Surfdog75 (Reply 21):
Overcapacity is a myth that the deal-makers who stand to make a fortune love to perpetuate.

Of course, of course it is a myth... that is why the airlines have in fact been so very profitable these last 5 years!
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
ARGinLON
Posts: 550
Joined: Wed Jun 22, 2005 6:26 pm

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 4:01 am

Quoting Surfdog75 (Reply 21):
They are basically trying to take out a competitor before it can take them out. It's a highly anti-competitive scheme that the DOJ/Congress will kill if it doesn't die sooner

US/DL combined would have 20% domestic market share. considering AA has around 16% it does not look like a anti-competitive issue.
 
ikramerica
Posts: 13730
Joined: Mon May 23, 2005 9:33 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 4:09 am

I see reasonable mergers as a good thing. While I enjoy choice, i'd like that choice to be universal. What I mean is, I'd like to be able to fly from anywhere to anywhere in the USA on one of 3 or 4 carriers, the same carriers each time. The idea of "regionally strong, regionally weak" airlines in this era seems silly to me, a remnant of the regulated days.

But the mergers need to be sensible in terms of routes and coverage (not fleets).

This is one reason that WN decided to take on ATA's routes. It "completes them" offering Hawaii, LGA and others.

AS+CO+Horizon is sensible. It fills in the gaps CO has and makes an airline that can completely cover the USA.

Alternately, CO+NW might make logical sense.

AA+US is sensible because it takes an airline with 3 strong hubs in the central and south USA with an airline with strong hubs in the middle atlantic and west. Combine the strong focus cities and you have an airline that flies just about everywhere in the USA.

DL already covers the USA. But even UA doesn't, with poor connections from the West to the Southeast.

DL+NW might make logical sense, though with some redundancy.

Even F9 and FL make sense together.

But a merger like DL+US makes no sense to me. It doesn't offer me anything as a consumer. But it's a free market, so if they want to do it, they can do it!
Of all the things to worry about... the Wookie has no pants.
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 4:19 am

Quoting ARGinLON (Reply 23):
US/DL combined would have 20% domestic market share. considering AA has around 16% it does not look like a anti-competitive issue.

FYI, here is some data from the BTS...

Jan-July 2006 Domestic Rank (enplanements in millions)

1 Southwest 56.1
2 American 46.0
3 Delta 37.9
4 United 33.8
5 Northwest 26.2
6 Continental 21.0
7 US Airways 18.9
8 America West 11.9
9 AirTran 11.8
10 SkyWest 10.8
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
ARGinLON
Posts: 550
Joined: Wed Jun 22, 2005 6:26 pm

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 4:22 am

Quoting Ikramerica (Reply 24):
But a merger like DL+US makes no sense to me. It doesn't offer me anything as a consumer. But it's a free market, so if they want to do it, they can do it!

Mergers don't have to be good for the consumer. This is a move from US purely to grow. How would they grow otherwise on this saturated market?
 
Tango-Bravo
Posts: 2887
Joined: Sun Jun 17, 2001 1:04 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 4:24 am

Quoting Commavia (Reply 6):
If not, the AmericaWestUSAirwaysDelta frankenstein crumbles, and somebody else -- probably Southwest, AirTran, JetBlue, Frontier, etc., or a combination -- will fill the void.

That is how it is supposed to work in a free market economy. The unfortunate reality, however, is that the U.S. airline paradigm has shifted to where "frankenstein" airlines are allowed by government to destroy competiton by engaging in all manner of collusion and predatory pratices on the one hand while being protected against putting themselves out of business by the same government.
 
MD-90
Posts: 7835
Joined: Mon Jan 17, 2000 12:45 pm

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 4:31 am

Quoting Halls120 (Reply 15):
This "air travel is destroying the environment" argument is one of the newer slogans from the enviros, and it has sort of a luddite ring to it, doesn't it? In SATX's world, only the rich and powerful get to fly, leaving the unwashed masses to stay at home and fold their shopping bags for reuse and be content.

Ah, something we can solidly agree on!

Quoting ARGinLON (Reply 16):
Nobody makes money from the NY area to MCO and FLL year round

We can definately agree on that. I apologize for calling you ignorant, it was not my best day.
 
commavia
Posts: 9635
Joined: Mon Apr 25, 2005 2:30 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 4:34 am

Quoting Tango-Bravo (Reply 27):
"frankenstein" airlines are allowed by government to destroy competiton by engaging in all manner of collusion and predatory pratices

Oh please, let's not get histerical.

Since the attempted (and failed, I might add) collusion by AA towards Braniff way back in 1983, please provide with one -- any single example -- ever proven of two airlines' "colluding" or "predatory practices" in order to "destroy competition."

And please, let's not resort to the standard answer -- American trying to drive Vanguard out of D/FW-Kansas City, American trying to put Legend out of business, etc. One airline competing with another on price does not constitute "collusion" or "predatory practices." It simply constitutes good business.
 
User avatar
SLCUT2777
Posts: 3407
Joined: Sun Jan 01, 2006 12:17 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 4:37 am

Quoting Ikramerica (Reply 24):
But a merger like DL+US makes no sense to me. It doesn't offer me anything as a consumer. But it's a free market, so if they want to do it, they can do it!

As a consumer all I end up with is FUBAR Air! The biggest most messed up airline in all of the USA let alone the world. If Parker succeeds in getting this merger, the company WILL FAIL since the logistics are bad enough as is.

Quoting ARGinLON (Reply 23):
US/DL combined would have 20% domestic market share. considering AA has around 16% it does not look like a anti-competitive issue.

When you look at the parts of the country they both have dominance in especially the southeast and eastern seaboard in some communities it approaches 80% is that consumer friendly market share?
http://www.usatoday.com/travel/fligh...s/2006-11-17-air-merger-usat_x.htm
I hardly think so!

Quoting Surfdog75 (Reply 21):
Two big reasons for the attempted takeover:
#1 - Parker and his cronies are greedy SOBs. He just sold 9 mil in stock in August while paying some of the lowest wages in the industry. They stand to make a huge fortune here.
#2 - He scared of what an emerging Delta will do to his airline. They will come out lean and mean with the a great route structure, low costs, clean airplanes, state of the art on-board entertainment, and down home service then eat his company for lunch while he's still trying to figure out how to integrate the US/AWA mess.

This hits the point those of us against this merger are trying to say right on. This is a completely hostile takeover attempt to take over a direct competitor, and eliminate any and all competition.

Quoting Surfdog75 (Reply 21):
Overcapacity is a myth that the deal-makers who stand to make a fortune love to perpetuate. Planes are full, oil is down, and the population is growing. If you reduce capacity it will just pop up again to fill the need that is there. Southwest, Jet Blue, Airtran etc will be the beneficiaries.

BINGO!!!  checkmark 

Quoting Surfdog75 (Reply 21):
They are basically trying to take out a competitor before it can take them out. It's a highly anti-competitive scheme that the DOJ/Congress will kill if it doesn't die sooner.

This is one they should shoot out of the sky faster than the proposed UA/US merger back in 2000. DL may still be in receivership, but they are not in dire straits as US was early last year when HP threw them a merger lifeline, or what TWA was in 1999 when AA grabbed them right on the brink of liquidation. Only the DL haters on a.net want this merger to work more than any group.
DELTA Air Lines; The Only Way To Fly from Salt Lake City; Let the Western Heritage always be with Delta!
 
User avatar
EA CO AS
Posts: 13397
Joined: Wed Nov 14, 2001 8:54 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 4:43 am

Quoting WDBRR (Reply 11):
Eastern into Texas Air.

Not a merger. In fact, not really a combining of two airlines. Texas Air was at that point the holding company that simply bought EA. Their other holdings were Continental (previously merged with Texas International), New York Air, PeoplExpress and Frontier - all of which were merged into and became CO, except EA.

Of course many of EA's assets were transferred at ridiculous "sale" prices to CO over the years, but that's a different story.
"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
 
goingboeing
Posts: 4727
Joined: Sat Dec 04, 1999 1:58 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 5:01 am

Quoting Commavia (Reply 29):
Since the attempted (and failed, I might add) collusion by AA towards Braniff way back in 1983, please provide with one -- any single example -- ever proven of two airlines' "colluding" or "predatory practices" in order to "destroy competition."

I'll give you 4 - USAirways, United, Northwest, Delta. The "collusion" was bankruptcy court. That is perhaps the MOST predatory practice of them all. Where else can a company just eliminate it's debt, push their retirement programs into a government insurance agency, and undercut airfares.

Why would folks be so against letting the free market work by letting at least one of the bankrupt airlines fail...as it is, any "merger" between US and DL would be pretty much the equivalent of them buying a competitor and shutting them down. Does US really need hubs in PHL, CLT and ATL? Makes no sense...shut one (or two) down...get rid of the employees, equipment, leases...pretty much what liquidation would have done. Oh yeah...make sure that Delta employees are "stapled" to the bottom of the seniority list so that they are the first to go. Net result - Delta is liquidated.
 
EWRCabincrew
Posts: 4306
Joined: Mon May 08, 2006 2:37 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 5:09 am

Quoting Matt D (Thread starter):
....to pilots and FA's that will still fight to the death their "right" to protect their Seniority Lists and other hideously archaic and obsolete mindsets. You are indeed PART OF THE PROBLEM. And please spare me the "you don't know what it's like in THIS business" rhetoric, which is usually a sign of someone who has no argument otherwise. I've worked in the private sector for many years, and have had to deal with ups and downs just as you have.

Tell us how you really feel. Where did the frustration come from?

I have been through a HUGE merger (CO/FL/PE/NY) and survived without scrapes. Better for it, too, I might add.

Do I want to see a merger? It is not for me to say. I am too far down the food chain to have an opinion about it. What I might have to say will never have any bearing on any potential outcome. If my job becomes obsolete or redundant - that'll be $3.95, please drive forward to the next window. I can adapt. I have my whole life.

Quoting Matt D (Thread starter):
I've worked in the private sector for many years, and have had to deal with ups and downs just as you have.

Bully for you. Welcome to the club.

As for the seniority list issue. You maybe right. It does seem outdated. Will it change. Never. No matter how much you scream, yell, hold your breath, jump up and down, sue, picket, go on strike, etc..

And when you do work for a company for 'x' years and merge with another, there is some semblance of merging the workers with regards to their hire dates with their perspective companies. It is not unique to the airline industry. I, too, have been in the 'private' sector and have gone through acquisitions and had to deal with company hire dates mattering to where I fell in the 'new' company. I just dealt with it and moved on and forward.

Time will tell and other those with any true power of making board decisions will do what needs/not needs to be done. The rest of us just sit back, watch, speculate and wait for the outcome.

This is why we are all here.

Quoting EA CO AS (Reply 31):
Of course many of EA's assets were transferred at ridiculous "sale" prices to CO over the years, but that's a different story.

As a side note, a few of us CO f/a's were crossed trained in '87/'88 on EA's L-1011s, 727s and 757s in the off chance CO took them over and flew them. Thankfully, we didn't. Talk about a weird time. Then there was the EA wetlease. That is another thread all together.
You can't cure stupid
 
Charger
Posts: 264
Joined: Mon Oct 16, 2006 11:20 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 5:21 am

Quoting Dank (Reply 7):
It's not just load factors that determine if there is overcapacity. You also have to look at yields. Airlines can end up filling seats by lowering prices to fill them. Prices are still pretty cheap in my experience (even with fuel costs being high).

Prices are cheap because of competition. Take the competition away and they can charge what they like.

Quoting WDBRR (Reply 13):
Well if airlines start cutting flights and fares go up,
I am sure an LCC will see it as an opportunity and
move in and offer the same flights at lower fares.
it would just give more market share to the LCC's.

If there are mergers, the # of flights will be cut and fares will go up. The LCC's will swoop in so fast no one will see them coming. Not only Southwest, Jetblue, and Airtran, but Virgin America is waiting in the wings and soon so will be Skybus. It would be no real surprise either if 1/2 a dozen other LCC's spring up. And guess what, we're right back where we started, fares will be down, Legacy Airlines struggling, etc..

Quoting Airbazar (Reply 17):
The only way to get out of it is through consolidation and reorganization, i.e. less capacity and lower operating costs.

How about if a company can't cut it just let them go under. Happens every day in the real world.

Quoting Surfdog75 (Reply 21):
Overcapacity is a myth that the deal-makers who stand to make a fortune love to perpetuate. Planes are full, oil is down, and the population is growing. If you reduce capacity it will just pop up again to fill the need that is there. Southwest, Jet Blue, Airtran etc will be the beneficiaries

Right on the money.

Quoting Ikramerica (Reply 24):
But a merger like DL+US makes no sense to me. It doesn't offer me anything as a consumer. But it's a free market, so if they want to do it, they can do it!

It makes no sense to me either. But I'm not in the boardroom of either of these airlines.

Quoting ARGinLON (Reply 26):
Mergers don't have to be good for the consumer

They seldom are, in the real world.

Quoting SLCUT2777 (Reply 30):
As a consumer all I end up with is FUBAR Air! The biggest most messed up airline in all of the USA let alone the world. If Parker succeeds in getting this merger, the company WILL FAIL since the logistics are bad enough as is

I agree 100%. Although my opinion is biased on this one.
 
TeamAmerica
Posts: 1540
Joined: Thu Sep 07, 2006 3:38 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 5:40 am

Quoting Surfdog75 (Reply 21):
Planes are full, oil is down, and the population is growing.

 point 1) Planes are full because prices are low. "Overcapacity" doesn't mean more seats than passengers, it means more seats than can be sold profitably.
 point 2) Oil is not "down". It's $56/bbl today, which would have been unthinkably high just two years ago. UA's bankruptcy exit plan assumed a worst case of $50/bbl! Also keep in mind that it is winter in the northern hemisphere, and a mild one at that. The price of oil next summer is what worries most.
 point 3) The US population is growing, but general affluence is not. Most of the growth is in segments that cannot afford to fly very often.
Failure is not an option; it's an outcome.
 
incitatus
Posts: 2691
Joined: Wed Feb 09, 2005 1:49 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 5:46 am

Quoting Commavia (Reply 6):
Especially as history in the airline industry shows, most mergers end up being disasters for the airlines involved anyway, so long-run, I really don't see how this poses much of a threat to American consumers.

It can be argued that mergers are not a controlled experiment. That is, one cannot state that most mergers are worse than the non-merged outcome. Mergers may be disasters but the future of the merged entities as standalone companies might be as bad, if not worse.
Stop pop up ads
 
ikramerica
Posts: 13730
Joined: Mon May 23, 2005 9:33 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 5:49 am

Quoting SLCUT2777 (Reply 30):
When you look at the parts of the country they both have dominance in especially the southeast and eastern seaboard in some communities it approaches 80% is that consumer friendly market share?

Exactly.

DL+US does not meet my "3 or 4 airlines from anywhere to anywhere" test. Instead, it cuts down the options for many people both in the southeast and middle atlantic, and in the non-California west. Any merger that limits competition without expanding scope and reach is not one I support.

US+AA would be much more complimentary and expand, not contract options for consumers.

DL is so large, that it would need to incorporate a smaller airline to fill in the gaps, not an overlapping airline. DL+AS would be a good combination, for example.
Of all the things to worry about... the Wookie has no pants.
 
commavia
Posts: 9635
Joined: Mon Apr 25, 2005 2:30 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 5:55 am

Quoting Goingboeing (Reply 32):
I'll give you 4 - USAirways, United, Northwest, Delta. The "collusion" was bankruptcy court. That is perhaps the MOST predatory practice of them all. Where else can a company just eliminate it's debt, push their retirement programs into a government insurance agency, and undercut airfares.

Again, let's not misuse words, just like how some people continually throw around "predatory." The bankruptcy process is in absolutely no way "collusion." "Collusion" is when two companies knowingly conspire or attempt to conspire to purposefully coordinate business planning in order to further their respective and/or mutual business objectives and harm a mutual competitor. That is hardly what bankruptcy is as, the last time I looked, Delta's lawyers weren't talking to United's who weren't talking to Northwest's all comparing notes. The information is out there for all the world to see, as it becomes public once a company files for bankruptcy, and that is hardly "collusion"

Quoting Goingboeing (Reply 32):
Why would folks be so against letting the free market work by letting at least one of the bankrupt airlines fail

I am in 100% complete agreement that failing companies should die. That is completely true, and I don't see how anyone could dispute it, and I further concur 100% about how the bankruptcy process has been misused to gain unfair advantage by United, Delta, Northwest and USAirways (twice!) in the last five years. However, that being said, it still doesn't change the fact that free markets overcome any potential advantage airlines derive in bankruptcy. Case-in-point: American and Continental haven't filed for bankruptcy since September 11, and both of them are now profitable, and have undergo dramatic operational and financial transformations in the last few years as they have rebuilt their companies and rethought their networks. This was all done outside of bankruptcy, and with the benefit of maintaining control.

Quoting Incitatus (Reply 36):
That is, one cannot state that most mergers are worse than the non-merged outcome. Mergers may be disasters but the future of the merged entities as standalone companies might be as bad, if not worse.

But that is not the point I am making -- I'm not comparing a post-merger outcome of any potential or previous airline merger with the hypothetical pre-merger outcome of either of the merging entitites. It's not about that, at least not with me. I don't care either way -- let them do what they want, and if it turns out good, fine, and if it doesn't, that's fine too. In the longrun, customers will continue to get the thing they value -- be it low fares, great service, whatever they demand -- or they'll move their business to another company.
 
goingboeing
Posts: 4727
Joined: Sat Dec 04, 1999 1:58 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 6:05 am

Quoting Commavia (Reply 38):
Case-in-point: American and Continental haven't filed for bankruptcy since September 11, and both of them are now profitable, and have undergo dramatic operational and financial transformations in the last few years as they have rebuilt their companies and rethought their networks. This was all done outside of bankruptcy, and with the benefit of maintaining control.

Indeed....but one has to wonder...how much stronger would CO and AA be had they not had to compete with carriers in bankruptcy protection?
 
surfdog75
Posts: 239
Joined: Thu Nov 17, 2005 5:39 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 6:26 am

Quoting Goingboeing (Reply 32):
Why would folks be so against letting the free market work by letting at least one of the bankrupt airlines fail...as it is, any "merger" between US and DL would be pretty much the equivalent of them buying a competitor and shutting them down. Does US really need hubs in PHL, CLT and ATL? Makes no sense...shut one (or two) down...get rid of the employees, equipment, leases...pretty much what liquidation would have done. Oh yeah...make sure that Delta employees are "stapled" to the bottom of the seniority list so that they are the first to go. Net result - Delta is liquidated.

The problem here is that the so called "legacy airlines" built the aviation system in a regulated environment. They built terminals and airports (taxes), hired, and compensated employees knowing they could make a profit. Then the government changed the rules. Companies like Southwest that paid employees much less, with no pension, and no retired employees had an instant cost advantage over companies with many infrastructure and retiree costs.

Many companies disappeared and some remade themselves under bankruptcy in the early 90's like Continental. Most of the remaining old line carriers are remaking themselves now for long term competitiveness in the deregulated world. The bankruptcy court is the only avenue available for most. It remains to be seen if American can stay out of the courts. Deregulation seems like a long time ago but I think we are seeing the final effects of it now.

Quoting TeamAmerica (Reply 35):
1) Planes are full because prices are low. "Overcapacity" doesn't mean more seats than passengers, it means more seats than can be sold profitably.
2) Oil is not "down". It's $56/bbl today, which would have been unthinkably high just two years ago. UA's bankruptcy exit plan assumed a worst case of $50/bbl! Also keep in mind that it is winter in the northern hemisphere, and a mild one at that. The price of oil next summer is what worries most.
3) The US population is growing, but general affluence is not. Most of the growth is in segments that cannot afford to fly very often.

1. The American consumer demands affordable air travel and that demand will be filled by someone. If the US/AWA/DL deal is allowed they will remove capacity and raise prices until a competitor moves in who will do it for less. Back to square one. You can't build a business on gouging the consumer. Americans now look at cheap travel as an entitlement.
2. DL's business plan is built on $60 oil I believe. $50 or $60 oil is entirely possible for the long term I think, as the high price was driven more by speculation than supply concerns.
3. See #1. Air travel is not only for the affluent anymore. Air travel will grow enormously over the next decade.
 
TeamAmerica
Posts: 1540
Joined: Thu Sep 07, 2006 3:38 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 6:36 am

Quoting Surfdog75 (Reply 40):
Americans now look at cheap travel as an entitlement.

Yeah, there's a bit of truth in that...but so what? If oil goes up, prices go up. No avoiding that. The advantage of LCC's is in low labor costs - as fuel becomes a greater factor their advantage is diminished. Consumers can demand "affordable" all they want, but the price of fuel may prevent it.

Quoting Surfdog75 (Reply 40):
the high price was driven more by speculation than supply concerns.

We all wish that was true. There is a finite supply of cheap oil. We may not face a near-term supply crunch, but that supply may be quite expensive.

Quoting Surfdog75 (Reply 40):
Air travel is not only for the affluent anymore. Air travel will grow enormously over the next decade

I've explained my views on this several times in other threads. Short version: NOT. High fuel prices are going to change everything.
Failure is not an option; it's an outcome.
 
surfdog75
Posts: 239
Joined: Thu Nov 17, 2005 5:39 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 6:57 am

Quoting TeamAmerica (Reply 41):
I've explained my views on this several times in other threads. Short version: NOT. High fuel prices are going to change everything.

It's too important to too many for the answer to be "NOT". Whether it's through alternative, synthetics, cheap fossil fuels, or something we don't even see on the horizon yet, the demand is there and it will be met.
 
commavia
Posts: 9635
Joined: Mon Apr 25, 2005 2:30 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 7:02 am

Quoting Goingboeing (Reply 39):

Indeed....but one has to wonder...how much stronger would CO and AA be had they not had to compete with carriers in bankruptcy protection?

Well, by American's own estimation, they now have the lowest non-labor costs in the U.S. legacy airline industry, and they achieved all of that with a management team wholly focused on restructuring, and not on bankruptcy petitions.

The only real major area of advantage that bankruptcy significantly provides is on the labor cost front. And, indeed, it's true that this is a major benefit for the bankrupt carriers.

However, again, American and Continental are reporting profits. They are on the road to recovery, so obviously they both feel vindicated in having not filed for bankruptcy and spent 2-3 years and hundreds of millions of dollars on legal bills and lawyers' fees.
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 7:03 am

Quoting Surfdog75 (Reply 40):
Then the government changed the rules.

It was the majors that wanted the rules changed.

Quoting Surfdog75 (Reply 40):
Companies like Southwest that paid employees much less, with no pension, and no retired employees had an instant cost advantage over companies with many infrastructure and retiree costs.

Southwest was a small regional airline at the time of deregulation... mainly flying into secondary airports the majors didn't service. In fact, their first service to a destination outside of Texas was only in 1979!

Quoting Surfdog75 (Reply 40):
1. The American consumer demands affordable air travel and that demand will be filled by someone. If the US/AWA/DL deal is allowed they will remove capacity and raise prices until a competitor moves in who will do it for less. Back to square one.

Affordable air travel??? Look at what is being charged now by the majors if there is no LCC on the same route - skyway robbery. It is not going to change unless there is an LCC competing on the same route.

Anyhow, here are some of the benefits of consolidation:

1) Lower CASM;
2) Higher productivity of assets and infrastructure;
3) Large savings across the board on costs;
4) More destinations on one airline;
4) Less ATC congestion;
5) Etc....

Quoting TeamAmerica (Reply 41):
We all wish that was true. There is a finite supply of cheap oil. We may not face a near-term supply crunch, but that supply may be quite expensive.

Only if the politicians continue to remain in the pocket of the oil companies. I have hopes that people will wake up and realize that they don't have to be held hostage by the "seven sisters".
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
TeamAmerica
Posts: 1540
Joined: Thu Sep 07, 2006 3:38 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 7:22 am

Quoting Surfdog75 (Reply 42):
It's too important to too many for the answer to be "NOT". Whether it's through alternative, synthetics, cheap fossil fuels, or something we don't even see on the horizon yet, the demand is there and it will be met.

I hate to quote Al Gore, but we're facing an inconvenient truth. Alternatives do exist and will be used, but they are all more expensive than the cheap oil we are accustomed to. Trusting that there is something better on the horizon is just blind faith. Maybe mankind will harness fussion reactions, but maybe not. Whatever may come, it's not coming soon enough.

Demand is not always met. Billions of people demand food yet have none.

Airline consolidation is necessary to allow prices to rise to the point of profitability. Rising prices tend to invite more LCC's, but rising fuel prices will make old/cheap aircraft uneconomical, meaning only those who can start new may succeed. That high entry cost may create a balance between the traditional carriers and LCC's that currently doesn't exist.

Take a good look at B6 and WN as they are right now. B6 is struggling for profits, and many have noted that without their brilliant fuel hedging strategy WN would have posted their first loss. WN's hedges are running out...so what do we say when the prototypical LCC can't make money? Fares must rise, or airline employees will have to accept minimum wage.
Failure is not an option; it's an outcome.
 
planemaker
Posts: 5411
Joined: Mon Aug 25, 2003 12:53 pm

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 7:44 am

Quoting TeamAmerica (Reply 45):
I hate to quote Al Gore, but we're facing an inconvenient truth. Alternatives do exist and will be used, but they are all more expensive than the cheap oil we are accustomed to.

Leaving aside for the moment the enormous carbon sequestration issues, the oil sands in northern Canada have more oil reserves than Saudi Arabia... and it is profitable to extract even when oil is in the $15/bbl range (and the extraction costs are droping). Then there is the shale oil of the mid-west which has more reserves than all of the Middle East and which is profitable to extract at around $30/bbl. And the heavy oil bitumen of the Orinoco basin likewise is profitable to extract at $20-$30/bbl.

As I pointed out earlier, the oil "issue" is really a political issue, not a supply issue.

Quoting TeamAmerica (Reply 45):
Take a good look at B6 and WN as they are right now. B6 is struggling for profits, and many have noted that without their brilliant fuel hedging strategy WN would have posted their first loss. WN's hedges are running out...so what do we say when the prototypical LCC can't make money? Fares must rise, or airline employees will have to accept minimum wage.

Good points to bring up. The recent airline crisis has chopped billions in costs from the legacies and have made them much more potent competitors to the LCCs. And, apart from WN, the legacies face little competition on many of their routes (and none overseas) from LCCs.

On the other hand, it seems that legacy employees do not realize that the new wage realities are permanent and not some temporary give-back. You will notice in the press that employee groups are already saying that they want increases since their airline has made a profit in 2 or 3 quarters.

The industry is in a financial quagmire and few seem to realize it. Massive amounts of new money will be required to renew fleets in just a few years and investors are not going to be there with the current status quo.
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
77411
Posts: 103
Joined: Thu Jul 20, 2006 2:38 am

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 10:22 am

[quote=Jaws707,reply=18]Compare the airline industry to the railroads. The railroads used to suffer from the same problems such as overcapacity, but they merged and we are now down to about 4 major RR's with some smaller ones. Now the 4 majors, BNSF, CSX, Norfolk Southern, and Union Pacific have very little competition as they mainly operate in different parts of the county. It's been great for them as they now make TONS of money, but shipping has become more expensive.


Comparing Railroads and Airlines is like comparing apples and oranges. I think a major benefit to the railroads in the past 20 years which you failed to account for has to be how products are now shipped from around the world to the US. The millions of containers which arrive via ships on the west and east coasts have to be distributed. The railroads benefit greatly by this. Land ownership needs to be taken into account as well. Airlines will never be able to own the airspace in a particular region of the nation and charge other airlines to use that space. I am sure we would have LCC type railroads if they could compete head to head and use any track with equal cost. If you eliminate all the containers I am sure profits would not be as high.

If we do in fact get alot of consolidation resulting in fewer airlines, like the railroads, the LCC's will step in and fill the gap. At some point in the future you will be in the same boat as today, overcapacity and cheap fares. Consolidation for the reason of capacity reduction will only work if all LCC's agree not to expand their network or if Boeing and Airbus agree to only make very few aircraft per year. Which we know has about as much of a chance as hell freezing over.
 
zippyjet
Posts: 5077
Joined: Tue Sep 04, 2001 3:32 pm

RE: Be Careful Of What You Wish For: Consolidation

Sat Nov 18, 2006 10:32 am

I say no thank you to this merger or any other for that matter. Working for FL, I feel we are doing quite fine as a stand alone and so shall US and DL do better as soverign airline companies.
I'm Zippyjet & I approve of this message!
 
satx
Posts: 2771
Joined: Mon Apr 11, 2005 7:26 am

RE: Be Careful Of What You Wish For: Consolidation

Sun Nov 19, 2006 2:15 pm

Quoting MD-90 (Reply 5):

But it sounds like what you really support is controlling other people based upon how you think they should be allowed to spend their own money. And of course government exists to enable certain people to control many others.

I don't follow you. Wouldn't preventing consolidation require more government control than allowing the mergers to take place?

Quoting Halls120 (Reply 15):
This "air travel is destroying the environment" argument is one of the newer slogans from the enviros, and it has sort of a luddite ring to it, doesn't it?

I never said it was destroying it, that's just you putting words in my mouth. The environment is a big place and actually destroying it will take a long time. However, here's what I did say since you seemed to miss it.

Quoting SATX (Reply 2):
From what I understand flying does a lot of damage to the environment, even more damage per seat than driving an American-sized vehicle. Thus, I really don't mind if they consolidate down to five or six airlines and double/triple/quadruple the current fares and drop all of the 'barely worth it' cities. As long as it helps cut down on all this runaway pollution I'll be fine with it.

And now back to your personal attack…

Quoting Halls120 (Reply 15):
In SATX's world, only the rich and powerful get to fly, leaving the unwashed masses to stay at home and fold their shopping bags for reuse and be content.

I'm neither rich, nor powerful, nor a Luddite (most environmentalists aren't BTW) and I don’t feel that I'm asking anyone else to sacrifice what I am unwilling to sacrifice myself.
Open Season on Consumer Protections is Just Around the Corner...

Who is online