Boston92
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Why No International Airline Mergers

Fri Dec 15, 2006 11:33 am

I just wanted to know why airlines from different countries never merge (and if it is even possible). Just think of what a UA/BA merger would look like, that would be ONE BIG AIRLINE!

Any Input is Great!
"Why does a slight tax increase cost you $200 and a substantial tax cut save you 30 cents?"
 
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Vasu
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 11:44 am

Quoting Boston92 (Thread starter):
ust think of what a UA/BA merger would look like

Christ... NOOOOOOOOOO!
 
Boston92
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 11:53 am

Quoting Vasu (Reply 1):

That was just an example, CALM DOWN!!!!!!
"Why does a slight tax increase cost you $200 and a substantial tax cut save you 30 cents?"
 
AirCop
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 11:59 am

How about KLM/Air France, aren't they in the process of merging?
 
gigneil
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 12:03 pm

The United States, and several other countries, have foreign ownership laws. There's also the issue of regulatory affairs.

NS
 
scotron11
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 12:07 pm

The big stumbling block to international airline mergers is the flying rights, plus government restrictions on ownership. Currently in the US it is 25% while over in Europe it is 49%.

An EU/US openskies deal would have erased a lot of restrictions but the US balked at raising the ownership/control to the same as EU because of opposition from politicians, unions and CO.

The same reasons that forced the selling of P&O Ports operations in the US to a US company when P&O Ports were taken over by a company in Dubai.

Xenophobic claptrap if you aks me!
 
USADreamliner
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 2:48 pm

KLM/Air France
SAS
Malaysia-Singapore Airlines ( this was more a separation than a merger)

And not sure about Air Afrique, I think AF founded the airline from zero, not merging national airlines.
 
kiwiandrew

RE: Why No International Airline Mergers

Fri Dec 15, 2006 2:49 pm

Quoting AirCop (Reply 3):
How about KLM/Air France, aren't they in the process of merging?

they have merged - they are one company which just happens to have two brands . LH/LX are in much the same boat though I think that LH's ownership of LX is a bit more complicated
 
jetdeltamsy
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 5:50 pm

There is KLM/Air France, Swiss/Lufthansa, Air Canada/Canadian Airlines, Singapore owns 49% of Virgin Atlantic.

There are a lot of international tie-ups out there.
Tired of airline bankruptcies....EA/PA/TW and finally DL.
 
TWFirst
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 5:55 pm

Quoting Scotron11 (Reply 5):
Xenophobic claptrap

 Big grin Big grin Big grin

You got it!
An unexamined life isn't worth living.
 
PanHAM
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 6:04 pm

Quoting Jetdeltamsy (Reply 8):
There is KLM/Air France, Swiss/Lufthansa, Air Canada/Canadian Airlines, Singapore owns 49% of Virgin Atlantic

All these mergers and acquisitions are within the legal limits that allow continued operation under the agreements with third countries.

That is exactly the reason why KLM and Air France are still operating under separate names. Lufthansa has not merged with LX but acquired exactly the amount of shares legally possible without Swiss losing traffic rights.

The Air Canada/Canadian merger took place in Canada, a domestic affair. SAS is incorporated under a special treaty between the three Scandinavian states. The SQ ownership of VS stays within the legal limits of foreign ownership.

Once an open skies agreement is signed with the US. the negotiation of traffic rights will go from the single EU countries to the EU commission in Brussels. ÖLatest then, the AF/KL merger will be completed and more multinational mergers and acquisitions will take place. There will be no small state or government sponsored airlines any longer, simply because from that date on, any EU carrier can fly from any place in the EU to any place worldwide.

In reality, this will still be through the hubs, but airlines like LOT, Austrian, Malev, Alitalia will either be taken over completely by one of the big 3 or run as a dependent business unit.
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ANother
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 6:46 pm

Quoting Scotron11 (Reply 5):
An EU/US openskies deal would have erased a lot of restrictions but the US balked at raising the ownership/control to the same as EU because of opposition from politicians, unions and CO.

Not true. The US never considered changing (i.e. asking Congress to approve) a change to the ownership and control provisions in US law. The US Department of Transport considered changing how they interpreted the 'control' provisions of US law but they have dropped this now.

Quoting PanHAM (Reply 10):
Once an open skies agreement is signed with the US. the negotiation of traffic rights will go from the single EU countries to the EU commission in Brussels. Latest then, the AF/KL merger will be completed and more multinational mergers and acquisitions will take place. There will be no small state or government sponsored airlines any longer, simply because from that date on, any EU carrier can fly from any place in the EU to any place worldwide.

That will only occur once the air service agreements with ALL third countries has been completed. So far the EU has reached 'community air carrier' agreements with Chile, Paraguay, Morocco and some of the 'Stans', they have a long way to go.
 
CO767
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 6:47 pm

You answered your own question, because it's international (in the USA of course). As already mentioned, KLM (the Netherlands) and Air Frace (France) have merged. But seeing how your from the U.S., i'm assuming your talking about American carriers.

U.S. carriers will merge with international carriers as soon as they all absorb into one gigantic, disfunctional and mis-managed carrier that insists on having the largest regional subsidiary on the planet. Wink

[Edited 2006-12-15 10:55:01]
 
PanHAM
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 6:51 pm

Quoting ANother (Reply 11):
That will only occur once the air service agreements with ALL third countries has been completed. So far the EU has reached 'community air carrier' agreements with Chile, Paraguay, Morocco and some of the 'Stans', they have a long way to g

It will happen very quickly once the EU/US open skies becomes reality, Brussels wants tp have its hands on everything.
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ANother
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 7:41 pm

Quoting PanHAM (Reply 13):
It will happen very quickly once the EU/US open skies becomes reality, Brussels wants tp have its hands on everything.

It, no doubt, will speed if (and I do mean IF) the EU/US open skies becomes a reality - but it is not a given that some of the more significant 'partners' will give this up easily.

Why, for example, would a country like South Africa want to allow any EU airline to fly from London to S. Africa? What's in it for them - possibly more tourists, but potentially at the cost of (higher paying) jobs at S. African airlines.

Don't get me wrong, I encourage each and everyone of them to throw these stupid rules into the rubbish bin, but, being realistic it isn't going to happen that fast.
 
PanHAM
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 7:53 pm

Quoting ANother (Reply 14):
Why, for example, would a country like South Africa want to allow any EU airline to fly from London to S. Africa? What's in it for them - possibly more tourists, but potentially at the cost of (higher paying) jobs at S. African airlines

sure, that's a point you have, however in reality it will be that the current hubs will keep their main tenants (or vv) AF/KL or LH would not fly LHR-JNB. Beeing part of an alliance is the betgter protection and the real "enemies" for SAA and other Africa airlines are the Gulf carriers with EK on top.
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aircanada014
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 7:58 pm

I would love to see AC and UA merge together, they would be a huge airline and allow two countries formed as one airspace and 8th freedom..
 
ANother
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 7:59 pm

Quoting PanHAM (Reply 15):
Beeing part of an alliance is the betgter protection

Without the outdated ownership and control rules, there would be no need for alliances. (and no reason for regulators to give them anti-trust immunity)
 
PanHAM
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 8:07 pm

Quoting ANother (Reply 17):

Without the outdated ownership and control rules, there would be no need for alliances. (and no reason for regulators to give them anti-trust immunity)

I challenge that. Large mergers like an AC/UA or any other thinkable combination would still need clearance by the anti trust agencies of the EU and the US. Happens in other industries fequently, the reqason is that no single company should have market dominance.

If you want to know what would happen if we had an open skies agreement on a worldwide scale look at ocean shipping and holiday cruises. It is reality in that industry and now check how many US based container lines we have.
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ANother
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 9:53 pm

Quoting PanHAM (Reply 18):
If you want to know what would happen if we had an open skies agreement on a worldwide scale look at ocean shipping and holiday cruises.

Did you ever wonder why 'Alaska Cruises' sail from Vancouver, and not Seattle? Gee, the US has ownership and control rules (even worse that aviation) on ships sailing between two US ports. Ship must be owned by US citizens, ship must be crewed by US citizens, ship must be built in a US port.

Again - I favour 'more than' open skies, but I don't think we are going to get it.

Also I don't disagree that any/every merger would have to pass anti-trust scrutiny - my point was if they were allowed to merge, we wouldn't need alliances. If it were to be anti-competive from a merger perspective, the same analysis has to apply for an alliance agreement.
 
PanHAM
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 11:19 pm

Quoting ANother (Reply 19):
Also I don't disagree that any/every merger would have to pass anti-trust scrutiny - my point was if they were allowed to merge, we wouldn't need alliances. If it were to be anti-competive from a merger perspective, the same analysis has to apply for an alliance agreement.



Quoting ANother (Reply 19):
Also I don't disagree that any/every merger would have to pass anti-trust scrutiny - my point was if they were allowed to merge, we wouldn't need alliances. If it were to be anti-competive from a merger perspective, the same analysis has to apply for an alliance agreement.

I don't know the company size from which it applies, but when 2 IT firms in the US merge, the EU has to give their OK as well.

Seattle-Alaska would be a cabotage route which is not allowed and regulated by the unions, not by the government. The Caribbean cruises from Florida is lss restricted.

Back to air - as long as domestic services are involved, a global merger would not make sense. Such a company would be very difficult to manage, different cultures, different labour laws. That is problematic enough in Europe, let alone on a flobal scale. EK and SQ don't have to worry about domestic, they are pre-destined to become truly global airlines but will always concentrate on medium and long haul.

The alliances are perfect - by combining the strenght of various companies in marketing and purchasing, you get the economics of scale while you still maintain smaller managable business units working under local conditions.

Nothing new BTW, freight forwarders operated like that long before airlines adopted the idea.
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scotron11
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 11:28 pm

Not true. The US never considered changing (i.e. asking Congress to approve) a change to the ownership and control provisions in US law.

I beg to differ. That was what the DOT was proposing, but it ran into so much opposition in congress they shelved the idea. Then, after the elections, they canned it all together. Oberstar was quite vocal in his opposition to this rule change.

Whatever the case, while the present executive branch would like an openskies deal and relaxation on foreign ownership laws, those "free traders" in congress will never allow it. But if UAL or someother US entity wanted to take over AZ, that's alright then!

But god forbid it took over a domestic one!
 
IADLHR
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RE: Why No International Airline Mergers

Fri Dec 15, 2006 11:36 pm

I think that with all the merger rumor talk, recently, in the USA and the threat of airline competition decreasing that Congress amy once again talk about and perhaps vote on increasing the foreign ownership levels in the USA.

I find it a bit interesting that the merger talks in the USA only intensified after congress put a stop to any change at all to the status quo.

So it could well be that the new congress, at least, debates this issue again. It just might the lesser of 2 evils.
 
SJCRRPAX
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RE: Why No International Airline Mergers

Sat Dec 16, 2006 2:26 am

Quoting IADLHR (Reply 22):
I think that with all the merger rumor talk, recently, in the USA and the threat of airline competition decreasing that Congress amy once again talk about and perhaps vote on increasing the foreign ownership levels in the USA.

I find it a bit interesting that the merger talks in the USA only intensified after congress put a stop to any change at all to the status quo.

So it could well be that the new congress, at least, debates this issue again. It just might the lesser of 2 evils.

IMHO, I doubt it. Unlike most European countries the USA has a trade defecit with almost every country in the world, we almost don't make anything anymore, everything seems to come from China, our national corporations are trying to outsource every single job we have, we have had 12 million South Americans cross the border without permission to take all the low paying jobs and drive wages down further, we import 1/2 of our oil. So in short, the American public for the most part is tired of the Rich Cats trying to destroy the jobs and lives of the ordinary guy and think this "internationalization" has gone far enough and have started to elect people who don't want to go down the road of destroying our civil aviation by letting Europeans get a piece of the pie. Enough is Enough and we ain't gonna take it no more and with the Democrats in control there is very little chance you will see ownership rules change. Why don't the European companies go try to buy up the Chinese airlines or something?
 
anstar
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RE: Why No International Airline Mergers

Sat Dec 16, 2006 2:33 am

Air NZ and Ansett tried it a few years back and we know how that one ended up.
 
PavlovsDog
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RE: Why No International Airline Mergers

Sat Dec 16, 2006 2:33 am

British Midland is largely owned by Lufthansa and Spaniair by SAS. Iberia owned Aerolineas Argentinas for a while. It is still in Spanish ownership if I understand correctly.
 
ANother
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RE: Why No International Airline Mergers

Sat Dec 16, 2006 2:42 am

Quoting PanHAM (Reply 20):
Seattle-Alaska would be a cabotage route which is not allowed and regulated by the unions, not by the government.

"The Jones Act (aka Merchant Marine Act) is a United States Federal statute that requires U.S.-flagged vessels to be built in the United States, owned by U.S. citizens, and documented under the laws of the United States. Documented means "registered, enrolled, or licensed under the laws of the United States." In addition, all officers and 75% of the crew must be U.S. citizens. Vessels that satisfy these requirements comprise the "Jones Act fleet"." This is like saying US airlines can only buy Boeing. Ever wonder why US doesn't have an open skies agreement with Australia? The Australians don't like the idea that their ferry-building industry is prohibited from selling their products to Washington State. Silly Ozzies.

Quoting Scotron11 (Reply 21):
I beg to differ. That was what the DOT was proposing, but it ran into so much opposition in congress they shelved the idea. Then, after the elections, they canned it all together. Oberstar was quite vocal in his opposition to this rule change.

Congress was never asked. The DOT never proposed to change the ownership of control law. Only their interpretation. From the recent press release they said "U.S. Transportation Secretary Mary E. Peters today announced the Department is withdrawing a proposal that would have changed rules governing international investment in U.S. airlines after reviewing a multitude of public comments, including those received from Congress. The Secretary also re-affirmed the U.S. commitment to completing a market-opening aviation agreement with the European Union." The NPRM* and SNPRM* can be found in docket 15759. Go here and enter the docket number. Happy reading.

*Notice of Proposed Rule Making (and Supplimentatal NPRM) is not a proposal to the US Congress to amend existing law. These were proposals for the DOT to revise their interpretation of US law.
 
SJCRRPAX
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RE: Why No International Airline Mergers

Sat Dec 16, 2006 3:26 am

Quoting ANother (Reply 26):
"The Jones Act (aka Merchant Marine Act) is a United States Federal statute that requires U.S.-flagged vessels to be built in the United States, owned by U.S. citizens, and documented under the laws of the United States. Documented means "registered, enrolled, or licensed under the laws of the United States." In addition, all officers and 75% of the crew must be U.S. citizens. Vessels that satisfy these requirements comprise the "Jones Act fleet"." This is like saying US airlines can only buy Boeing. Ever wonder why US doesn't have an open skies agreement with Australia? The Australians don't like the idea that their ferry-building industry is prohibited from selling their products to Washington State. Silly Ozzies.

This is a great law. If we didn't have this law our ship building industry would be non existant, which we need for our national defense. If we didn't have this law I imagine we would have Chinese owned barges traveling between St. Louis and New Orleans and no U.S. owned ships or crews. The Aussies should respond buy not allowing us built ferries to be sold in Austrailia. If Boeings market share ever fell to the point that it could no longer stay in Business, I would strongly advocate a law requiring US airlines to only buy Boeing as opposed to say only Korean and China making airlines. Every country needs to protect its own interests.
 
stirling
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RE: Why No International Airline Mergers

Sat Dec 16, 2006 3:28 am

We already have International Airline Mergers.

They are called Star, SkyTeam, and OneWorld.

It is not just about corralling Frequent Flyer programs in to one common pot for the benefit of passengers.....it has more to do with the keeping revenue within the cartel.

Some airlines, when I am browsing their schedules, or examining their routemap, reveal the fact that they rely more on the services of their partners, than what they provide on their own metal.....The virtual airline.
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PanHAM
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RE: Why No International Airline Mergers

Sat Dec 16, 2006 7:04 am

Quoting PavlovsDog (Reply 25):
British Midland is largely owned by Lufthansa and Spaniair by SA

LH is not happy with that investment. LX and Air Dolomiti work much better for them. But these are strategic investments, alliances are the answer. Just imagine lh#s shape if they had wasted money into United. It was always Weber's strategy to stay out of such deals and hat was proven right more than once.

Quoting ANother (Reply 26):

"The Jones Act (aka Merchant Marine Act) is a United States Federal statute that requires U.S.-flagged vessels to be built in the United States, owned by U.S. citizens, and documented under the laws of the United States. Documented

These laws are lobbyed by the unions. The Senators and Congressmen are gently forced to pass such protectionist laws in return for votes. A lawmaker with vision and knowledge that there is a planet outside the USA would not pass such stupid legislation. I worked at JFK in the 70s and we had the teamsters local 295 in the company. Before the Presidential election the union instructed all members to vote for Nixon. In these days, people did not refuse offers the teamsters made.

Quoting SJCRRPAX (Reply 27):

This is a great law. If we didn't have this law our ship building industry would be non existant, which we need for our national defense. If we didn't have this law I imagine we would have Chinese owned barges traveling between St. Louis and New Orleans and no U.S. owned ships or crews. The Aussies should respond buy not allowing us built ferries to be sold in Austrailia. If Boeings market share ever fell to the point that it could no longer stay in Business, I would strongly advocate a law requiring US airlines to only buy Boeing as opposed to say only Korean and China making airlines. Every country needs to protect its own interests.

What you advocate is protecitonism and that always leads to bad products. That is exactly the wrong way. Keep the nose up in competition and build a better product. Boeing is doing exactly that and competes efficiently with Airbus. If your country ever starts to overly protect Boeing that will be the beginning of the end of that company. No one should worry about the crap they make in China. You get a new Chinese machine for less than they sell a second hand oin Germany and the second hand is still better than the Chinese crap.

Quoting Stirling (Reply 28):
It is not just about corralling Frequent Flyer programs in to one common pot for the benefit of passengers.....it has more to do with the keeping revenue within the cartel.

It is never a cartel. Airlines in alliances quote different fares for the same route. Staying in an alliances has many benefits for the passengers, what is wring when *A serves more than 800 cities?

Interlining with full service carriers outside alliances is still possible. Besides that, passengers can use LCC's when they do not need to connect. It is a big open market for the consumers
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stirling
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RE: Why No International Airline Mergers

Sat Dec 16, 2006 7:37 am

Quoting PanHAM (Reply 29):
It is never a cartel. Airlines in alliances quote different fares for the same route.

They control capacity, which in turn dictates demand and the end-price to the consumer.

Quoting PanHAM (Reply 29):
what is wring when *A serves more than 800 cities?

I am afraid I don't understand the question.

Quoting PanHAM (Reply 29):
What you advocate is protecitonism and that always leads to bad products.

No, it prevents an off-shore company from importing labor at below-market wage levels.
The same factors which lead to corporations sending production and back-office functions to India and China would allow those nations to bring in air crews paid well below that of U.S. Airlines.
Imagine an Indian owned airline being able to operate domestically within the U.S....and paying air crews a quarter, or even half of the current lowest going payscale! Existing U.S. carriers would not be able to compete.
This is right? All in the name of competition? I hope not.
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jimyvr
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RE: Why No International Airline Mergers

Sat Dec 16, 2006 7:37 am

Quoting PanHAM (Reply 29):
LH is not happy with that investment. LX and Air Dolomiti work much better for them.

That's because Mr. Bishop still decides what to do with bmi and obviously he has no clue what's going on. LH have major say in LX and EN so it went well smoothly.
1000 - 01MAR07 | http://airlineroute.blogspot.com/
 
PanHAM
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RE: Why No International Airline Mergers

Sat Dec 16, 2006 4:15 pm

Quoting Stirling (Reply 30):

They control capacity, which in turn dictates demand and the end-price to the consumer.

ehh, rather not. They are independent companies and each company CEO is responsible to his share holders which also means they have to avoid everything that makes an alliance look like a cartel. The EU and the US authorities are nasty when they can prove a cartel.

Quoting Stirling (Reply 30):
I am afraid I don't understand the question.


what is wrong with.. was rather a statement then a question.

Quoting Stirling (Reply 30):

No, it prevents an off-shore company from importing labor at below-market wage levels.
The same factors which lead to corporations sending production and back-office functions to India and China would allow those nations to bring in air crews paid well below that of U.S. Airlines.
Imagine an Indian owned airline being able to operate domestically within the U.S....and paying air crews a quarter, or even half of the current lowest going payscale! Existing U.S. carriers would not be able to compete.
This is right? All in the name of competition? I hope not.

sorry but what you say is rubbish. Every state and country has the full legal authority on what is happening within its boundaries. First of all - nobody advocates here that an Indian company operates domestic schedules in the US. But even if that would happen this company would be subject to the laws of the companies they operate in. That means - union contracts must be honoured at lkeast mimimum wage must be paid - and most important - the workers must qualify for immigration,meaning they mmust have a green card.

This argumentation is ill informed populism and does not reflect reality. DHL for instance employs locals in the US, only the top management may be foreign and this German companies CEO North America is Australian, IIRC. When you go to their EMEA HQ in Diegem near Brussels airport this place is a small United Nations but the employees all make wages that allow them a very good life in that expensive city,

Quoting Jimyvr (Reply 31):

That's because Mr. Bishop still decides what to do with bmi and obviously he has no clue what's going on.

when it comes to the conditions of the contract with LH - which are very favorable for Mr. Bishop himself - I am sure that he knows exactly what is going on.
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bobnwa
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RE: Why No International Airline Mergers

Sat Dec 16, 2006 11:21 pm

Quoting SJCRRPAX (Reply 27):
This is a great law. If we didn't have this law our ship building industry would be non existant, which we need for our national defense.

Our ship building industry is already virtually non existent. How many large cruise ships, tankers or container ships have been built in the U.S. recently.
 
aircanada014
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RE: Why No International Airline Mergers

Sun Dec 17, 2006 12:21 am

Lets have North American Union one airspace for Canada, USA and Mexico.
Then it would be a challenging allow AC and UA merge along with CO  Smile
 
USADreamliner
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RE: Why No International Airline Mergers

Sun Dec 17, 2006 4:45 am

Quoting SJCRRPAX (Reply 27):
This is a great law. If we didn't have this law our ship building industry would be non existant, which we need for our national defense. If we didn't have this law I imagine we would have Chinese owned barges traveling between St. Louis and New Orleans and no U.S. owned ships or crews. The Aussies should respond buy not allowing us built ferries to be sold in Austrailia. If Boeings market share ever fell to the point that it could no longer stay in Business, I would strongly advocate a law requiring US airlines to only buy Boeing as opposed to say only Korean and China making airlines. Every country needs to protect its own interests.

George W., is that you..?
 Big grin Ha,ha,ha Big grin

this was a simple question, and as usual, it ended up like this...
 
SJCRRPAX
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RE: Why No International Airline Mergers

Sun Dec 17, 2006 5:08 am

Quoting USADreamliner (Reply 35):
George W., is that you..?
Ha,ha,ha

this was a simple question, and as usual, it ended up like this...



Obviously not, as George W. is a free trader, let the best economy win, who cares about U.S. Jobs, if you can't compete you shouldn't be in the game, minimum wage laws are bad for business kind of guy. I suspect your views on the world economy are much closer to his than mine. I also suspect that many of the people on this forum who are against George W., align with his views on the world economy such as "open skies". "foreign ownership of U.S. ports", "free trade" and "balance of trade is unimportant".

Simple questions often have complex answers. Perhaps you could provide your simple answer.
 
FlyboyOz
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RE: Why No International Airline Mergers

Sun Dec 17, 2006 7:57 am

Qantas and Air New Zealand were trying to merge together but the Australia and NZ governements say "NO"
The Spirit of AustraliAN - Longreach
 
ANother
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RE: Why No International Airline Mergers

Sun Dec 17, 2006 7:03 pm

Quoting FlyboyOz (Reply 37):
Qantas and Air New Zealand were trying to merge together but the Australia and NZ governements say "NO"

Not a merger. This from NZ Commerce Commission website:

On 9 December 2002 the Commerce Commission (the Commission) received two interdependent applications for authorisation from Air New Zealand Ltd (Air NZ) and Qantas Airways Ltd (Qantas).

The first application by Qantas, made under section 67(1) of the Commerce Act, relates to a proposed “share purchase agreement” whereby Qantas would acquire 22.5% of the voting equity in Air NZ.

3. The second application by Air NZ and Qantas, made under section 58 of the Commerce Act, relates to the proposed implementation of a “strategic alliance arrangement” between Air NZ and Qantas. The strategic alliance arrangement would, among other things, require the two airlines to:

• create a “Joint Airline Operation”. Every Air NZ flight and those Qantas flights to, from, and within, New Zealand would make up the Joint Airline Operation. Its commercial activities would be managed by Air NZ, and which would be overseen by a strategic alliance advisory group comprising three representatives of each airline;

• coordinate all aspects of the Joint Airline Operation including passenger fares and freight rates, flight schedules, the amount of passenger and freight capacity provided on each sector, code-sharing, marketing, frequent flyer programmes and profit-sharing; and

• cooperate in relation to other airline operations outside the scope of the Joint Airline Operation.

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