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enilria
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Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 6:01 pm

People seem to want VX to fail on a.net, but I agree with Branson that the industry needs competition and it is beginning to be sorely lacking. I agree that VX's investment probably was obtained by dodging the ownership laws, but regardless we need every airline left.

"When American Airlines went into Chapter 11 a few slots became available. Virgin America entered the market and fares from Newark to California dropped by 40% and suddenly consumers had better options with new planes, in-flight wi-fi and exemplary service. But instead of competing based on quality, United then conjured up a whole batch of previously "non-existent" slots to double their capacity on San Francisco-New York and Los Angeles-New York flights to try to squeeze Virgin America out."


"They have been playing this game against Virgin America by putting on extra capacity on our other routes at a massive loss to themselves. My estimate is that the extra capacity out of Newark will cost them $130 million per year - just to try to drive us out of the marketplace.

Well, we won't be driven out. It didn't work in Chicago or Dallas and it won't work here...we would ask the Department of Transportation to consider looking into what United has been up to these past couple of years and consider taking appropriate action."

http://centreforaviation.com/members...me-big-airlines-never-learn-105498
 
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 6:06 pm

This was already discussed...and locked.

Virgin America And Newark (by olympic472 Apr 10 2013 in Civil Aviation)
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enilria
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 6:10 pm

Quoting United1 (Reply 1):
This was already discussed...and locked.

Virgin America And Newark (by olympic472 Apr 10 2013 in Civil Aviation)

The linked article is dated today.
 
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enilria
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 6:12 pm

I read both. The comments are similar, but they are not the same. The ones I linked explicitly say DOT should investigate where in your link Branson said they were evaluating whether to ask.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 6:20 pm

I think VX is a unique airline. Would definately choose them over all airlines on any day! They seem to care more about giving passengers a unique on board product, whereas the majority of US domestic airlines lack that special connection (that i see) with their passengers  
 
hereandthere41
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 6:23 pm

Bottom line....if VX wants to compete against UA or any other airline, let them compete with the resources they have available. And if their product is preferred by customers, then let them prevail. Every airline is in the business of making money. Why should anyone just roll over when a new competitor enters the marketplace? Compete or leave the market. But something tells me that VX will have a hard time winning over the most important customers who will sustain an operation. They can have the low-end crowd. They're fickle anyway. Entering a market and selling the product way below cost is just as detrimental as flooding the market with seats. What's good for the goose.....
 
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 6:23 pm

Quoting enilria (Reply 3):
The ones I linked explicitly say DOT should investigate where in your link Branson said they were evaluating whether to ask.

...its still from the same line of comments that Branson made from the original article. More grandstanding by Branson and no action taken....nothing has been filed with DOT and as such its simply hot air. This topic has been discussed to death and as several members were not able to control themselves in the last thread it was locked. I don't see any purpose in discussing it further as your article doesn't add anything new to the topic...
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 6:29 pm

Is UA acting like a child? probably, but they have every right to move around where and when they fly.

If they feel they need more flights to a specific destination then they should be free to reallocate to do that.

We all make this seem like this is new behavior. DL is a king at this. AA, NW and US have all done it. Some do it more than others. People may not like it, but we have a free market.

I personally do not feel this is anti-competitive. How can it be that way if the fares have gone down by 40%?
One can only prove it is anti-competitive if after VX leaves the market and UA reduces the number of flights to jack fares back up. Then it is anti-competitive, but as of now they are competing in a specific way. If people want choice between SFO & LAX to EWR then they have tons of them on UA. VX is limited because of slots and they are a new entrant. The same reason that they would get slots at any slot controlled airport that UA can't (like DCA).
 
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 6:52 pm

VX is acting anti competitively by selling product below cost for half a decade. They lowered fares in a market by 40%? Yeah, by offering fares that don't make a profit against other airlines who barely make money as it is.
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 7:04 pm

Quoting hereandthere41 (Reply 5):
if VX wants to compete against UA or any other airline, let them compete with the resources they have available.

It is not lawful for UA to use predatory pricing (lose money) to exhaust VX of funds on the route. If it were legal, then UA has an invincible monopoly on the route.

Branson is putting them on notice. Anti-trust laws are coming back to life. Their relevance is increasing as airlines/telecom/internet networks get more consolidated.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 7:06 pm

If there is a valid complaint, VX should file. Their customer satisfaction is high.

But its not just UA. VX goes after already established routes. That means every flight triggers a reaction by a competitor.

IMHO, VX showed B6 there is more of a market for TCON premium product. While B6 was picking up some of that on their own, I believe if there had never been a VX then B6 would not be discussing adding TCON flights with first class. Is it anti-competitive for B6 to compete?    Should UA play a bit more fair?   

But lets look at what happend New York to the West coast. Fares plummeted which spikes demand. UA brought in new aircraft to fill. Whenever prices drop, demand goes up. If UA doesn't add capacity to a market VX enters, they are forfeiting that market to VX. So it becomes a question of "if VX can lose money on a flight, why not UA?" I hold no illusion UA is playing nice (or necessarily smart). I think this is for the DOT to look into as there are many factors.

Quoting enilria (Thread starter):
but regardless we need every airline left.

Huh? 3 big network carriers, WN #1 domestically, B6, AS, F9, Spirit, Allergiant, and VX. I think we could loose one or two more without 'needing' the remaining to survive. I'm not anti-VX, I just do not get their business plan (lack of profit). Its not just UA...

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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 7:17 pm

Where was this complaining when VX started ORD-SFO and UA proceeded up to 21 daily flight (from 12-14)?
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 7:18 pm

BTW, where did UA find all of those extra slots @ EWR?
 
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 10:22 pm

Oh boo hoo. If you want to enter a market with dirt cheap fares, you can't expect the largest carrier in that market to roll out the red carpet. UA is doing what any other airline would do, and Branson knows that. If he can opt to lose money on a route, so can UA.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 10:32 pm

Quoting psa1011 (Reply 12):
BTW, where did UA find all of those extra slots @ EWR?

They are not any extra slots at EWR. I can be 100% certain, but I expect that UA was forced to cut back flights in other markets to get the slots to LAX and SFO flights.
And if UA decides to dedicate certain planes to the route to try to match the amenities (ie international 757's, etc) that is up to them as well.

I think it is fair to say that UA views these hub to hub routes as very important (just like SFO to ORD) and wanted to show VX that they should not expect UA to just sit around while they added flights on to their home turf. If VX did not expect a response from UA they were dreaming.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 10:39 pm

Quoting FriendlySkies (Reply 13):
Oh boo hoo. If you want to enter a market with dirt cheap fares, you can't expect the largest carrier in that market to roll out the red carpet. UA is doing what any other airline would do, and Branson knows that. If he can opt to lose money on a route, so can UA.

  

Waa waa...poor SRB. Every airline has the right to defend their turf/hub/routes. If it isn't fare sales it's upping capacity, mileage bonuses, special promotions. Branson is the king of that....all hat and no cattle.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 10:44 pm

Quoting HiFlyerAS (Reply 15):

Waa waa...poor SRB.

Did they wheel him out when AS added all that capacity? I'm surprised I haven't seen him squawking in a while in support of VX
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 11:44 pm

Quoting MaverickM11 (Reply 16):
Did they wheel him out when AS added all that capacity? I'm surprised I haven't seen him squawking in a while in support of VX


AS SEA-SFO 6x-7x daily
VX SEA-SFO 3x-4x daily

AS SEA-LAX 10x-12x daily
VX SEA-LAX 3x-4x daily

Barely hanging on in SEA it appears. Three flights a day seems pretty much the minimum you could offer to still be considered much of a player.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Tue Apr 16, 2013 11:52 pm

Quoting Flighty (Reply 9):
It is not lawful for UA to use predatory pricing (lose money) to exhaust VX of funds on the route. If it were legal, then UA has an invincible monopoly on the route.

A. It isn't legal? Are you sure? What is predatory pricing here?
B. VX is the one doing this. They entered a market with below market fares to try to steal pax from competitors. They offered a premium product for a non-premium price, which they have proven quarter after quarter is a MONEY LOSING ENDEAVOR. But UA can't respond? Please...
C. UA has nowhere near a monopoly on New York to Los Angeles. EWR is not considered a market. It's a port into a market.

Quoting lightsaber (Reply 10):
So it becomes a question of "if VX can lose money on a flight, why not UA?" I hold no illusion UA is playing nice (or necessarily smart). I think this is for the DOT to look into as there are many factors.

I think it's sad that the DOT is getting more and more involved in pricing, slots, etc. We are moving more and more back to regulation, rather than more and more away.
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 12:01 am

Quoting psa1011 (Reply 12):

BTW, where did UA find all of those extra slots @ EWR?

Well, from this weeks OAG thread:

Quoting enilria (Thread starter):
UA EWR-DSM JUN 1.6>1.0
UA EWR-GRR JUN 3>1.7
UA EWR-MCI JUN 5>4
UA EWR-MDT SEP 1.2>2
UA EWR-MSP JUN 6>5
UA EWR-PWM JUN 5>4

There are a couple of the slots.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 12:06 am

Quoting enilria (Thread starter):
But instead of competing based on quality

And yet VX hasn't yet proven that they can profitably compete based on quality!

Besides, "quality" is highly subjective. To some people it means mood lighting. To others it means hourly frequency and a global frequent flyer program. To each their own.

Quoting enilria (Thread starter):
Well, we won't be driven out.

We'll just lose millions staying in!

  

Quoting ORDBOSEWR (Reply 7):
Is UA acting like a child? probably, but they have every right to move around where and when they fly.

  

Quoting lightsaber (Reply 10):
But its not just UA. VX goes after already established routes. That means every flight triggers a reaction by a competitor.

Exactly. If VX wants to avoid a competitive response, they can try flying their mood lit A320s on SFO-BHM or LAX-BIL. But if they want to continue to try and skim the choicest customers away from the biggest carriers on the busiest trunk routes, it's kind of laughable for them to feign intrigue when said biggest carriers respond with all the tools at their disposal. What are competitors supposed to do?
 
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 12:14 am

Quoting ORDBOSEWR (Reply 7):
Is UA acting like a child? probably, but they have every right to move around where and when they fly.

If they feel they need more flights to a specific destination then they should be free to reallocate to do that.

I totally DISAGREE when it it involves a federally slot-controlled airport.........but that's just me
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 12:33 am

How is this "anti competitive" ? Seems specifically competitive. A new entrant came into a market and they are competing aggressively. I think VX's business model has just been flawed from the start. They seem to be going after a very small group of customers that are already aggressively sought after. I just don't think that Branson gets the US. I don't know any other airlines with a fleet the size of VX that flies so few routes to so few destinations. It could never serve my needs. WN can't even with as few destinations as they serve.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 12:39 am

Quoting United1 (Reply 6):
...its still from the same line of comments that Branson made from the original article. More grandstanding by Branson and no action taken....nothing has been filed with DOT and as such its simply hot air.

Predatory pricing - or predatory action - is extraordinarily difficult to prove, or to have upheld.

One of the most famous cases was Northwest dumping on Reno Air - on the surface an almost text book case of predatory behaviour. Reno eventually filed a $5 million law suit against Northwest, but the case was eventually dismissed.

http://www.lasvegassun.com/news/1999...o-air-antitrust-lawsuit-dismissed/

"Northwest Airlines said Wednesday it was pleased with the dismissal of a 1997 lawsuit filed against the Minnesota carrier by Reno Air."

I don't have a problem with SRB making a noise. I'm not sure why anyone does.

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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 12:53 am

The position VX has taken is complete ridiculous UA has the right to defend those routes and nothing that UA is doing violates any laws so having the DOT look into UA's practices for the past few years will yield nothing.

VX faced the same competition when they entered the ORD-LAX and ORD-SFO markets. UA and AA both significantly increased the number of daily nonstops they operated between ORD and LAX; and UA nearly doubled the number of nonstops offered between ORD and SFO. If AA or DL entered the SFO-EWR market UA would have the same response but the difference is both AA and DL would be able to effectively compete against UA, and neither of those airlines would go crying to the DOT to investigate UA because they feel like UA is being anti-competitive.

The problem here is VX does not have the planes or the network to compete effectively against UA on this route. VX picked this fight with UA and while VX'x customer service and onboard product beats UA product and customer service hands down that is only part of the battle, the other part or should I say the major part of the battle is convenience and choice. With UA you may get crappy customer service but at least you can leave almost whenever you want to because UA has numerous nonstops to fit your schedule. VX on the other hand has flights that may fight your schedule and then again they may not. In today's environment U.S. customers like having choices and they love convenience if VX wants to compete against UA on this route they need to devote more of their fleet to the SFO-EWR-SFO route. But then that would require them to cut flights to other cities because they (VX) are not able to compete.

I don't want to see VX go bankrupt or be put out of business but they need a better business model that will make them profitable and they need to learn how to better compete against the majors.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 12:56 am

Quoting hereandthere41 (Reply 5):
if VX wants to compete against UA or any other airline, let them compete with the resources they have available. And if their product is preferred by customers, then let them prevail. Every airline is in the business of making money. Why should anyone just roll over when a new competitor enters the marketplace?

Then no business will ever be able to start again because when a company doubles the produce they have to sell like UA did in EWR-LAX/SFO in order to flood the market with seats in order to drive out a competitor and then jack up prices even further after they have run them out to recoup their losses we have a problem. A new carrier will NEVER EVER have the financial resources of an established 1000 plane airline. That's an impossibility.

Quoting Flighty (Reply 9):
It is not lawful for UA to use predatory pricing (lose money) to exhaust VX of funds on the route. If it were legal, then UA has an invincible monopoly on the route.

Exactly

Quoting lightsaber (Reply 10):
If there is a valid complaint, VX should file.

I suspect the reason they don't is that the DOT is toothless whether it be investigating anti-competitive behavior or foreign ownership complaints.

Quoting lightsaber (Reply 10):
Quoting enilria (Thread starter):
but regardless we need every airline left.

Huh? 3 big network carriers, WN #1 domestically, B6, AS, F9, Spirit, Allergiant, and VX. I think we could loose one or two more without 'needing' the remaining to survive. I'm not anti-VX, I just do not get their business plan (lack of profit). Its not just UA...

The big 3 don't compete with each other on price and we all know it. B6 is not longer a low price carrier. AS never was. Both seem to want to employ the "if you can't beat 'em, join 'em" philosophy. Allegiant and F9 have very constrained "models" and will have no effect on the travel needs of 99% of the passengers in the USA. NK is probably the best hope and people generally hate them.

Quoting commavia (Reply 20):
Quoting ORDBOSEWR (Reply 7):
Is UA acting like a child? probably, but they have every right to move around where and when they fly.


I argue that they don't. If your son opens up a lemonade stand and MinuteMaid opens up 4 locations on all sides of the street until he is out of business and then shuts their stands I'd say that is not capitalism. It is an attempt to create Communism through monopolism.

Quoting mariner (Reply 23):
I don't have a problem with SRB making a noise. I'm not sure why anyone does.

We agree. If they didn't wish to revive their ownership battle I'd suggest they push DOT, but they are in no position to do that unfortunately. Frankly, DOT should investigate these things without needing to be asked.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 12:58 am

Quoting mariner (Reply 23):
I don't have a problem with SRB making a noise. I'm not sure why anyone does.

I just think its really really Ironic since VX was created to push UA under, and now he is complaining that his target didn't go quietly in the night.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 1:08 am

Quoting XT6Wagon (Reply 26):
I just think its really really Ironic since VX was created to push UA under, and now he is complaining that his target didn't go quietly in the night.

I find it extraordinarily difficult to imagine that SRB - or anyone associated with Virgin America - thought they were going to "push United under".

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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 1:22 am

Quoting ikramerica (Reply 8):
VX is acting anti competitively by selling product below cost for half a decade. They lowered fares in a market by 40%? Yeah, by offering fares that don't make a profit against other airlines who barely make money as it is.

I agree. It's almost like airline murder-suicide. "If we cant make it, we will take them down with us"
 
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 2:15 am

I feel little sympathy for SRB. One of the biggest reasons that VX has a cost advantage over United is because it has a young, junior workforce. In particular, United has to pay top-of-payscale pay to many work groups, and it has to pay for health insurance for an older group of employees, which is much more expensive.

No one is innocent here. United dumped its pension liability on the taxpayers – which is why its costs are more “competitive” than they used to be. But part of the reason they did that was because of scorching competition from younger carriers that had far lower retirement costs.

At the end of the day, we all are going to need a place to work when we are middle aged and older. And we might want to work somewhere until we get senior on that job. VX got into the game at the moment when financing costs on new airplanes were low, and wagered that by running a carrier without older and senior employees, it could eat United alive. United has opted to fight back with its own massive resources, and I fully understand why.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 2:23 am

Quoting enilria (Reply 25):
A new carrier will NEVER EVER have the financial resources of an established 1000 plane airline. That's an impossibility.

And a new carrier also doesn't have to worry about D checks, pensions, a VERY senior workforce with 5+ weeks of vacation etc, etc, etc...

Which of course, gives the upstart artificially low overhead (no pensions to speak of, a junior workforce which is far from topped out, little accrued vacation time, very little or no heavy maintenance to speak of thus far)

So what does the fledgling upstart do? Try to use its lower cost structure (at least temporarily, until its faced with those same things the legacies are dealing with...pensions, topped out workforce etc....) and tries to muscle into an 800 pound gorilla's backyard and actually has the gall to think that this gorilla will just sit idly by as it cherrypicks its customers away from under its nose.

Can a legacy ever hope to match VX on a CASM basis? Of course not, for the very reasons stated above. What it does have, however, and you alluded to it in your comment above, Enilria, is the deep pockets necessary to bleed the little engine that could dry if it wishes for a fight.

What would you rather UA do, just throw up their hands and say "Oh well, we can't match the artificially low fares of VX so we might as well throw in the towel now", or fight tooth and nail?
 
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 3:24 am

Quoting mariner (Reply 27):
I find it extraordinarily difficult to imagine that SRB - or anyone associated with Virgin America - thought they were going to "push United under".

Its hard to imagine today, but at the time United was shrinking rapidly, losing cash faster than you can think. AA was also even deeper in trouble than it was when it went into BK, so clearly there was a chance that *something* would have popped.

In the end, the problems getting it started delayed it long enough that the whole US industry was on the mend. VX also was crippled in its ablity to source capital to fund an agressive expansion so it also lost power to affect the industry there too.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 3:50 am

Quoting XT6Wagon (Reply 31):
Its hard to imagine today, but at the time United was shrinking rapidly, losing cash faster than you can think.

By 2005, there wasn't much doubt that United was going to pull through in fairly reasonable shape and in the beginnings of Virgin America, United still had the many protections of the bk court at its disposal.

Virgin America might surely have expected an easier path but many of its problems were of its own making and I don't think it's a good idea to start an airline on the basis that "something might pop."

Nor do I know how a fleet of A320's was going to take a major airline like United down, but if you want to say that SRB & Co were overly-optimistic then I probably wouldn't argue.

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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 4:20 am

Quoting lucky777 (Reply 30):
What would you rather UA do, just throw up their hands and say "Oh well, we can't match the artificially low fares of VX so we might as well throw in the towel now", or fight tooth and nail?

Costs aren't artificially low. They are smaller, which means they have lower costs. That is not artificial. Whether they will be able to sustain those costs or become profitable is another thread.

As stated earlier Anti-trust/Anti-competitive lawsuits are very difficult to prove to be true. If somehow VX can prove that UA is flooding their markets with excess supply in order to intentionally exhaust the funds of a competitor at an artificially low price, then they may have a case. Even then the cost of going to court might be greater.

Airline consolidation has brought about an interesting environment in today's industry. It will be interesting to see in the coming years how the smaller airlines and start ups deal with 4 mega carriers with seemingly unlimited resources and a too big to fail attitude.

Last point, I have a feeling SRB is really just tooting his horn to get some publicity. Not a bad strategy if one wants to create a negative image of one of its largest competitors. Big bad UA vs the upstart VX. Whether that is true or not is irrelevant, but that is how some will see it.
 
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 5:21 am

I see Branson's complaining for what it really is; the last act of a desperate man.
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 5:22 am

What did VX expect. Did they expect UA to have a competing carrier enter their fortress hub and it would just be business as usual. To me VX had to see this coming and they are just going through the motions in the hopes that litigation will give them a leg on UA in UA's airport.
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Max Q
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 6:55 am

It's a free market, you take your chances, if you want to take on the 800LB Gorilla don't expect him to just sit there.
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ordbosewr
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 12:47 pm

Quoting 727LOVER (Reply 21):
I totally DISAGREE when it it involves a federally slot-controlled airport.........but that's just me

So now you want to further control where those slots are used?
That seems ridiculous to me...... This not considered reasonable in the airline business, unless you go back to a completely regulated market. Which we do not have. So you have to give the companies the right to make business decisions and that should include any decisions.

Quoting Flighty (Reply 9):
It is not lawful for UA to use predatory pricing (lose money) to exhaust VX of funds on the route. If it were legal, then UA has an invincible monopoly on the route.

Who lowered the prices first? That is a key aspect to this argument. You are assuming that UA lowered the price BEFORE VX. However, if VX began pricing then UA changed the price to MATCH VX then how is that anti-competitive? A company is reacting to the market and competition. That is 100% legal.

NO company is prohibited from selling something below cost, in retail, grocery stores often sell some products below cost to get consumers in the stores. that has not been deemed anti-competitive.
If pricing was the only aspect that determined anti-competitive then VX would be anti-competitive. Anti-competitive behavior is not derived from a single action it is the sum of many actions.
 
MIflyer12
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 12:52 pm

Quoting enilria (Reply 25):
Quoting lightsaber (Reply 10):
If there is a valid complaint, VX should file.

I suspect the reason they don't is that the DOT is toothless whether it be investigating anti-competitive behavior or foreign ownership complaints.

VX doesn't need DOT enforcement - it could file a federal suit against UA. It's very unlikely to prevail given airline pricing vs. standards of 'fair cost' pricing established in federal law, and that's a reason for Branson's jawboning.
 
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lightsaber
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 1:11 pm

In all this talk, does SRB realize that the Virgin airlines aren't perceived as 'upstart underdogs' so much anymore? He has overplayed that card for too long. Oh, 20 years ago it was a believable routine. But B6 came in and was that upstart for TCONs. There simply isn't the void there was a decade ago. WN, B6, and to a lesser extent Spirit have filled it.

Next will see SRB hanging out with a woman in a bikini young enough to be his granddaughter.    I personally think its time for him to retire.

Quoting ORDBOSEWR (Reply 37):
However, if VX began pricing then UA changed the price to MATCH VX then how is that anti-competitive? A company is reacting to the market and competition. That is 100% legal.

That is it in a nutshell. Until VX starts making money, they simply won't win that argument.

Quoting commavia (Reply 20):
If VX wants to avoid a competitive response, they can try flying their mood lit A320s on SFO-BHM or LAX-BIL.

You forgot BDL.   But you are right in that:

Quoting commavia (Reply 20):
But if they want to continue to try and skim the choicest customers away from the biggest carriers on the busiest trunk routes, it's kind of laughable for them to feign intrigue when said biggest carriers respond with all the tools at their disposal. What are competitors supposed to do?

Every competing airline is going to react when a trunk route is invaded. IIRC, DL peaked at 21 flights/day LAX-ATL to keep B6 out of LGB-ATL. I didn't like that, but that was a legal reaction. Airlines have certain 'must have' routes. For UA, it is LAX to New York (both EWR and JFK).

Quoting EA CO AS (Reply 34):

I see Branson's complaining for what it really is; the last act of a desperate man.

Considering how poorly most of his airlines are doing financially, excluding VA which, IIRC, he doesn't control anymore...

Quoting mariner (Reply 32):

Virgin America might surely have expected an easier path but many of its problems were of its own making and I don't think it's a good idea to start an airline on the basis that "something might pop."

If I may rephrase, it is a horrid business plan to expect competitors to keep making mistakes and not adapt. All 3 majors have lowered their costs dramatically.

Lightsaber
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enilria
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 1:31 pm

Quoting XT6Wagon (Reply 26):
I just think its really really Ironic since VX was created to push UA under
Quoting mariner (Reply 27):
I find it extraordinarily difficult to imagine that SRB - or anyone associated with Virgin America - thought they were going to "push United under".

I don't often agree with Mariner, but he is 100% right. Who from VX ever said they were going to push UA "under". BTW, they already went "under" and came back after dumping all their obligations on taxpayers and bondholders. VX and any start-up are happy to survive, much less kill a legacy.

Quoting lucky777 (Reply 30):
And a new carrier also doesn't have to worry about D checks, pensions, a VERY senior workforce with 5+ weeks of vacation etc, etc, etc...

Legacies don't have to worry about pensions either. The U.S. taxpayer does. Legacies don't have to worry about unsecured debt like VX does, you just file Ch11 and wipe it away. ...and BTW, you have to accrue for D checks so VX's financial results which everybody hates includes an accrual for that. and UA's vacation policy is their choice.

Quoting lucky777 (Reply 30):
So what does the fledgling upstart do? Try to use its lower cost structure (at least temporarily, until its faced with those same things the legacies are dealing with...pensions, topped out workforce etc....) and tries to muscle into an 800 pound gorilla's backyard and actually has the gall to think that this gorilla will just sit idly by as it cherrypicks its customers away from under its nose.
Quoting lucky777 (Reply 30):
What it does have, however, and you alluded to it in your comment above, Enilria, is the deep pockets necessary to bleed the little engine that could dry if it wishes for a fight.

The deep pockets are the problem and that needs government intervention to remain in balance. Capitalism is supposed to be survival of the fittest. It is not supposed to be all the old bucks ganging up to suffocate the younger and stronger as they are born so that the species ultimately withers and dies. That's what is happening. Ch11 and wrecked what is supposed to be the "circle of life" in this industry. Companies have their hey-day and then adapt or lose. Myspace? IBM? Microsoft? All sat atop the heap only to be replaced by FB, Apple, and Google. There is a life-cycle. All we have in this industry is consolidation, mergers, and Ch11. It is stagnation with the possible exception of NK.

Quoting lucky777 (Reply 30):
What would you rather UA do, just throw up their hands and say "Oh well, we can't match the artificially low fares of VX so we might as well throw in the towel now", or fight tooth and nail?

That's what the airlines have done with NK. They don't match them. That's why they are doing so well and growing like a weed. Of course, NK has designed a fee structure that the legacies really can't match (carry on bag fee) , so they are also smarter...and expect no favors from DOT. In fact, the opposite has actually happened. DOT, at the insistence of the other legacies, has been pushed toward adopting the same fare policies (advertised prices we all fees included) so that the legacies can match them again and thus kill them. So far it has failed really only because the carry on bag fee has been excluded from being required in the advertised fare.

Quoting MIflyer12 (Reply 38):
VX doesn't need DOT enforcement - it could file a federal suit against UA. It's very unlikely to prevail given airline pricing vs. standards of 'fair cost' pricing established in federal law, and that's a reason for Branson's jawboning.

The issue is not pricing. They will never win on pricing because of the way the game is set up. They definitely should win on capacity. UA should not be allowed to double their flights the day they announce. That is clearly predatory and measurable.
 
PanAm1971
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 1:39 pm

I've heard really good things about VX... and I'm probably going to book on them next month. There seems to be so much fear and loathing on a.net about VX that they must be on to something. I'm very curious.
 
PHX787
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 2:33 pm

Hmm Where are our "big hub big airlines" guys right now?  

I don't like Branson that much. he's a nutcase, he tries too much, etc. etc. etc. I can go on forever, but I won't because he has a good point here. America DOES need more competition! Especially with the legacies. As I've stated before, it's not just hurting the industry, it's hurting the consumer. Which, therefore, hurts in the industry.
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commavia
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 2:39 pm

Quoting enilria (Reply 40):
The deep pockets are the problem and that needs government intervention to remain in balance.

In a functioning democracy, property rights are sacrosanct. It is not the government's job to "intervene" and keep "in balance" the distribution of assets among multiple competitors in an already-vibrantly-competitive market. That's a very, very scary notion.

Quoting PanAm1971 (Reply 41):
I've heard really good things about VX... and I'm probably going to book on them next month.

They definitely have a great product - no question about that.

Quoting PanAm1971 (Reply 41):
There seems to be so much fear and loathing on a.net about VX

Not so much "fear and loathing" as lack of patience with VX's constant whining that they should be handed things for free and get special treatment seemingly just by virtue of the fact that they're so wonderful, and yet so chronically unprofitable.

Quoting PanAm1971 (Reply 41):
that they must be on to something.

They most definitely are on to something - offering a top-notch product at a loss. Actually making money is the trick they haven't quite caught onto yet.

Quoting PHX787 (Reply 42):
Hmm Where are our "big hub big airlines" guys right now?

Right here - in "hiding" - where you last left me.   

Quoting PHX787 (Reply 42):
America DOES need more competition!

No it doesn't, at least not when it comes to airlines. Air fares - adjusted for inflation and stage length, and even including ancillary fees - have decreased by essentially half in 30 years. Competition and choice is not something the U.S. air travel consumer lacks, the misguided protestations of A.net members notwithstanding.

[Edited 2013-04-17 07:41:01]
 
Rdh3e
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 2:42 pm

Quoting TW870 (Reply 29):
which is why its costs are more “competitive” than they used to be.

Which is laughable because UA has the highest cost in the industry by a large margin now that AA hit the BK button.

Quoting enilria (Reply 40):
Legacies don't have to worry about pensions either. The U.S. taxpayer does.

Well that's actually false. UA pays a significant amount to the PBGC that took over the pensions. Last year alone we paid something like 400M.

Quoting enilria (Reply 40):
Legacies don't have to worry about unsecured debt like VX does,

....Yes they do, anything after their BK and often now some unsecured creditors can get stock in the new company...

Quoting enilria (Reply 40):
It is not supposed to be all the old bucks ganging up to suffocate the younger and stronger

Ha, good joke, VX stronger   
 
superjeff
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 2:50 pm

Quoting enilria (Thread starter):
Legacies don't have to worry about pensions either. The U.S. taxpayer does. Legacies don't have to worry about unsecured debt like VX does, you just file Ch11 and wipe it away. ...and BTW, you have to accrue for D checks so VX's financial results which everybody hates includes an accrual for that. and UA's vacation policy is their choice.

I think you don't have a clue about bankruptcy laws and how they work. Yes, UA did dump its pension plans, and got rid of or renegotiated other obligtations. But their shareholders were totally wiped out and lost everything. So filing Chapter 11 is not something you do simply to dump overhead - there is a major downside to it as well, and it isn't pretty. Not to mention that there is no guarantee of ever coming out of a Chapter 11 (see Braniff, Eastern, Pan Am, etc.).
 
sirloin
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 2:53 pm

I can see both sides of the issue. On the one hand, I have no issue with competitors dumping capacity if they have it available to protect their turf. I do, however, agree that using Chapter 11 as a get-out-of-jail-free card, thereby putting everyone who has avoided it at a massive disadvantage, ought to come with some stipulation. Honestly, where does it end? At what point can the bankruptcy courts tell a carrier they won't offer them the Chapter 11 option? US Airways got it twice. Does every carrier get extended that courtesy?

It was said above that capitalism is survival of the fittest. It was also said that Chapter 11 destroys that system, and I'm inclined to agree. If anything, don't get rid of it, but I would think that it should come with stipulations about not being allowed to actively participate in what are surely unprofitable activities. If you've had to essentially get bailed out, you shouldn't be able to use that for a predatory advantage.

I don't profess to fully understand the financial side of the industry, so take my comments for what they're worth, but I just don't think it's fair that some carriers who had properly managed their way through the trying times of the industry without having to go bankrupt should suffer a disadvantage against those who have. Whose to say that if one of the remaining legacies bit the dust back during bankruptcy, others might have avoided it and the remaining carriers would be better off?
 
olddominion727
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 2:54 pm

AA did this at JFK to fend off B6 with n/s service to SFO, OAK, SJC, ONT, LAX, SNA, LGB, SAN... Where are those flights now? In the history books, because flooding the market didn't work.
 
lhcvg
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 3:13 pm

Quoting HiFlyerAS (Reply 15):
Quoting FriendlySkies (Reply 13):Oh boo hoo. If you want to enter a market with dirt cheap fares, you can't expect the largest carrier in that market to roll out the red carpet. UA is doing what any other airline would do, and Branson knows that. If he can opt to lose money on a route, so can UA.


Waa waa...poor SRB. Every airline has the right to defend their turf/hub/routes. If it isn't fare sales it's upping capacity, mileage bonuses, special promotions. Branson is the king of that....all hat and no cattle.

This is what makes this a non-starter for me -- VX has opted to compete against entrenched legacy hub routes for much of their route network, and so they to some extent get what's coming to them. Predatory pricing is what it is (if they can prove it in court, fine, but as said above that's tough to do), but overall I'm not sure what their complaint is when they seem to go after UA prime routes in particular.
 
avek00
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RE: Branson: UA Acting Anti-competitively Against VX

Wed Apr 17, 2013 3:14 pm

Quoting PHX787 (Reply 42):
America DOES need more competition!

No, it doesn't. We've have enough of an irrational competitive landscape that led to many carriers, few profits, and communities and employees left holding the bag. Consolidation has produced the healthiest air carriers America -- and indeed, the world --- has ever seen.
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