LAXintl
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AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 6:17 pm

Reportedly, AA and US Airways are about to hold meetings with the US DOJ where they will offer antitrust concessions.

It believed the concessions will focus on concerns over the combined positions of the carriers at Washington Reagan National.

Meetings with DOJ comes on heels of the airlines offering to vacate pair of LHR slots to allow competitors to launch PHL service.

One person familiar of the meetings dubbed the talks as "the end game", that could shape the details of the world's largest airline merger.


AMR, US Airways Offer Antitrust Concessions
http://goo.gl/NkQSvY

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justplanenutz
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RE: AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 6:52 pm

Swap 10-12 slots at DCA for a like number at JFK with B6 and call it day!
 
ckfred
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RE: AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 9:05 pm

Here's my question about the LHR slots. Who wants to start service on PHL-LHR? I know that Delta was ramping up service in MIA, but I think they wound up codeshare with Virgin Atlantic.

But, considering how close JFK is, why would Delta have any interest.

This makes even less sense for UA, with EWR and and IAD also quite close.

Besides its hub at PHL, the route made sense for US, since a number of European members of Star serve LHR. Virgin Atlantic doesn't belong to a hub. So would this route really make sense for them?
 
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par13del
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RE: AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 9:09 pm

Quoting ckfred (Reply 3):
So would this route really make sense for them?

I suspect its not about the route but appearing to give something up, better to give up something that you can easily kill the competiton versus something of true value.
Now if the politicians and the airports would allow the slots to be used for any airport pair with the same time slot...............
 
jetblueguy22
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RE: AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 9:15 pm

Quoting ckfred (Reply 3):
Here's my question about the LHR slots. Who wants to start service on PHL-LHR? I know that Delta was ramping up service in MIA, but I think they wound up codeshare with Virgin Atlantic.

I could see someone grabbing the route. I agree that UA is probably out, but I could see DL taking them. Is it a pair as in two roundtrips or just one? Perhaps a VS/DL pair of flights if there really are two.
Pat
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jumpjets
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RE: AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 9:19 pm

Quoting ckfred (Reply 3):
Besides its hub at PHL, the route made sense for US, since a number of European members of Star serve LHR.

Given that the Star traffic is likely to dry up maybe it makes less sense for US/AA to continue their A333 to LHR which may be why they are seemingly willing to surrender the slot to a rival to keep the EU happy.

Any residual US traffic that doesn't need an onward connection with Star could potentially be absorbed if the BA68 were to be upguaged from a 3 class 767 to a high density 3 class 772 - it does after all leave PHL only 45 minutes after the current US flight, so no great inconvenience to the traveller.
 
jfk777
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RE: AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 9:53 pm

Quoting jumpjets (Reply 5):
Given that the Star traffic is likely to dry up maybe it makes less sense for US/AA to continue their A333 to LHR which may be why they are seemingly willing to surrender the slot to a rival to keep the EU happy

US/AA will continue to fly to LHR from PHL, its the major USair hub, the slot used may not be the current one US uses. Any one thinking that the new AA will Not fly fro PHL to LHR should re-evaluate that thought. Now its very possible the new AA will give up a slot or two at LHR to smooth over the UA and DL concerns. The old AA and BA have an ocean of LHR slots, one wil be found for AA to fly to LHR from PHL along with existing BA service. This will not be an only BA flown route, if that were to happen then AA could tell BA to stop flying to DFW and give that route to AA.
 
FWAERJ
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RE: AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 10:06 pm

I have a hunch that any slots divested at DCA will go to WN, which has been screaming that they need more DCA slots as of late. There is precedent: look at the UA/CO merger... the party that got all the divested EWR slots was WN.

PHL-LHR seems like a logical fit for either DL or VS (maybe even a mix).

I also expect US to divest their leases for three T2 gates at ORD to NK in exchange for AA getting NK's two gates on T3 Concourse L (isn't at least one widebody-capable?) so more oneworld partners, BA in particular, can move departures to T3. NK is gate-constrained at ORD and could combine the three US gates with the City's unused Gate E8 for four gates total. As for domestic AA flights at ORD: AA's gates at T3 have enough slack to pick up all US flights and handle a major expansion at the same time.
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commavia
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RE: AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 10:18 pm

No shocking news here - precisely as expected. It was obvious AA/US were going to have to give something up - no matter how much Parker and Horton didn't think they should have to. I (and others) thought their arguments were reasonable - but of course it seems obvious they'll ultimately have to divest at least some slots.

Quoting ckfred (Reply 2):
Here's my question about the LHR slots. Who wants to start service on PHL-LHR? I know that Delta was ramping up service in MIA, but I think they wound up codeshare with Virgin Atlantic.

But, considering how close JFK is, why would Delta have any interest.

Delta/Virgin seems to me to be the only plausible alternative, but even there, I, too, question how well they might do in the market. I certainly don't think they could support more than a 763. But honestly, even that seems somewhat like a stretch to me given how much stronger AA/BA will be at both ends of the route.

Quoting FWAERJ (Reply 7):
I have a hunch that any slots divested at DCA will go to WN, which has been screaming that they need more DCA slots as of late. There is precedent: look at the UA/CO merger... the party that got all the divested EWR slots was WN.

True. It is likely Southwest will be a big recipient - although I find that ironic considering that Southwest itself is now such a massive airline and hardly in need of much competitive help. Plus, it's also somewhat notable that DCA is likely to lose nonstop service in some small-/medium-sized and/or limited-entry markets in order to gain more 737s to Florida.

Quoting FWAERJ (Reply 7):
I also expect US to divest their leases for three T2 gates at ORD to NK in exchange for AA getting NK's two gates on T3 Concourse L (isn't at least one widebody-capable?) so more oneworld partners, BA in particular, can move departures to T3. NK is gate-constrained at ORD and could combine the three US gates with the City's unused Gate E8 for four gates total. As for domestic AA flights at ORD: AA's gates at T3 have enough slack to pick up all US flights and handle a major expansion at the same time.

  

It would be great for AA and its JV partners to be able to consolidate international departures in T3.
 
justplanenutz
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RE: AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 10:30 pm

Quoting commavia (Reply 8):

So, if given the choice, who would AA rather divest DCA slots to-WN or B6? Gotta be B6 because WN would wind up flying DCA-DAL on a bunch of them as soon as Wright goes away.
 
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jfklganyc
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RE: AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 10:38 pm

B6 won't swap anything.

They'll get slots in DCA without doing anything but showing up to the table.

Its a different game now
 
silentbob
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RE: AA/US To Make Concession To US DOJ

Fri Jul 26, 2013 10:55 pm

Quoting par13del (Reply 3):
I suspect its not about the route but appearing to give something up, better to give up something that you can easily kill the competiton versus something of true value.

Like the CO/UA merger, it looks like US/AA is proposing a solution up front instead of waiting to see what the government forces on them. If their proposal is reasonable, and addresses specific competition issues, it will be hard to justify more significant divestitures.

Quoting FWAERJ (Reply 7):

I have a hunch that any slots divested at DCA will go to WN, which has been screaming that they need more DCA slots as of late.

I think US would try to guide the slots where they want them, much like UA did with the EWR divestitures, but I do not think they want WN to have them. If they go to bid, it will be interesting to see if WN is finally willing to pay for the slots.

Quoting justplanenutz (Reply 1):
Swap 10-12 slots at DCA for a like number at JFK with B6 and call it day!

That is a very interesting suggestion.
 
ldvaviation
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 12:12 am

Quoting jfklganyc (Reply 10):
B6 won't swap anything.

They'll get slots in DCA without doing anything but showing up to the table.

Its a different game now

If JetBlue wants all the slots for itself, it will work out a swap or long term lease with AA before there is even the possibility of an auction.

If JetBlue can content itself with a few slots, it will just show up at the table.

Whatever the case, it will have to pay for the slots.
 
JoePatroni707
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 12:15 am

I am some what surprised that JFK (NYC) was not mentioned. Although US did give up some slots earlier at LGA, the combined AA/US will be a big force at JFK/LGA...
 
usflyer msp
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 12:22 am

Quoting JoePatroni707 (Reply 13):
I am some what surprised that JFK (NYC) was not mentioned. Although US did give up some slots earlier at LGA, the combined AA/US will be a big force at JFK/LGA...

...yet still significantly smaller than DL, which is why NYC slots are not an issue in this merger...
 
MAH4546
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 12:23 am

Quoting JoePatroni707 (Reply 13):
I am some what surprised that JFK (NYC) was not mentioned. Although US did give up some slots earlier at LGA, the combined AA/US will be a big force at JFK/LGA...

Since the combined carrier will only be 2nd at LGA and 3rd at JFK (in other words, nothing changes from AA's current position), there is no conditions under which slots can be taken away from it whatsoever. It keeps every slot.
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727LOVER
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 12:25 am

Quoting justplanenutz (Reply 9):
So, if given the choice, who would AA rather divest DCA slots to-WN or B6? Gotta be B6 because WN would wind up flying DCA-DAL on a bunch of them as soon as Wright goes away.

If that is the case, AA should work out a deal and just sell the slots to B6
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RWA380
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 1:32 am

Quoting FWAERJ (Reply 7):
I have a hunch that any slots divested at DCA will go to WN
Quoting commavia (Reply 8):
True. It is likely Southwest will be a big recipient - although I find that ironic considering that Southwest itself is now such a massive airline and hardly in need of much competitive help.

I was watching Doug Parker talking to a government committee on C-SPAN in the middle of the night, a few weeks back. It does not sound like US/AA is going to loose much. He told them flat out, US/AA will drop smaller city service first if they are forced to divest DCA slots, which was hard news to hear for a representative from VT, whose one and only non-stop home is on US, and she is a committee representative.

If forced to divest, the slots will not be just directed to one carrier, it sure sounded like there would be a quasi-lottery system to dole them out. According to the committee, if they are not forced to divest, the combined US/AA will have 70% of the total slots at DCA when they merge. That is a big monopoly on one of the most in demand airports in the country.

The committee is aware US considers it a connecting hub, they did not seem terribly alarmed about the situation. They had aviation experts, and numerous others to give their opinion, some who had spoken when UA and CO merged.

But whatever it takes to get this merger approved, is what it seems US/AA are willing to do. There were big differences in the number of city pairings that would be effected by the merger. US says 17 city pairs (only non-stop markets) the committee has 100s of them, but most were connecting markets.
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TWA902fly
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 4:09 am

Quoting commavia (Reply 8):
I certainly don't think they could support more than a 763. But honestly, even that seems somewhat like a stretch to me given how much stronger AA/BA will be at both ends of the route.

DL does have transatlantic configured 757s... maybe that'd do fine on PHL-LHR?

'902
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alfa164
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 5:06 am

I suspect DL would be very interested in the slots, but not necessarily to fly PHL-LHR. If AA/US divests itself of the LHR slots (I don't believe PHL is slot-controlled, so that side is irrelevant), it could use them to open SLC-LHR - or some other surprise departure city.
 
MIflyer12
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 5:12 am

Quoting TWA902fly (Reply 18):

DL does have transatlantic configured 757s... maybe that'd do fine on PHL-LHR?

DL does have some TATL config 757s but they also have high J and low J configs of 767-300ER that would allow them to respond to J:Y mix. DL/VS may not regard PHL as a must-have market irrespective of slots coming available opportunistically.
 
usflyer msp
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 5:31 am

Quoting MIflyer12 (Reply 20):
DL/VS may not regard PHL as a must-have market irrespective of slots coming available opportunistically.

I concur. DL is only able to make PHL-CDG work with a summer-only 75L flight, despite the connecting potential with AF. I highly doubt they would be able to make PHL-LHR work. VS' relatively small LHR footprint means most traffic would have be local PHL and LHR traffic; a market segment DL is not well positioned to be competitive in...
 
commavia
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 11:42 am

Quoting RWA380 (Reply 17):
It does not sound like US/AA is going to loose much.

I agree. I just don't see the justification for regulators to confiscate a large pool of slots from AA solely on the basis of a high market share overall. That was obviously meaningless in the case of UA/CO at EWR. On a market level, AA/US only overlap in two markets out of DCA. I expect the two carriers will not have to give up more than 20 slot pairs - I actually expect even less.

Quoting RWA380 (Reply 17):
If forced to divest, the slots will not be just directed to one carrier, it sure sounded like there would be a quasi-lottery system to dole them out.

We'll see. Divested slots at LGA were forced into a blind auction system in blocks of slot pairs, but divested slots at EWR were directed to a specific recipient.

Quoting RWA380 (Reply 17):
The committee is aware US considers it a connecting hub, they did not seem terribly alarmed about the situation.

Politicians are politicians. In addition to generally being idiots, they have their own agendas which are different than regulators'. Politicians quickly grasp the potential for negative fallout if small markets they represent do, in fact, lose air service to DCA as a result of AA being forced to give up slots there. Nonetheless, it is not really politicians' call. A very large group of them wrote a letter to regulators urging them to go easy on AA/US. We'll see if it was effective. But it is still the executive branch that makes the ruling.

Quoting TWA902fly (Reply 18):
DL does have transatlantic configured 757s... maybe that'd do fine on PHL-LHR?

I think Delta wanted to keep all LHR flying on at least 767s.

Quoting alfa164 (Reply 19):
I suspect DL would be very interested in the slots, but not necessarily to fly PHL-LHR.

Well then, if recent history is an guide, these concessions would probably be far less useful to them. The PHL-LHR concessions AA/US have agreed to with the EU are likely just like those AA/BA made a few years back - they appear to be route-specific. What Delta might be able to get away with down the road is being able to use one of these confiscated AA/US PHL-LHR slot pairs to fly PHL-JFK-LHR. Not sure - it will all depend on how the language is written.
 
AAplat4life
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 12:25 pm

Quoting alfa164 (Reply 19):
I suspect DL would be very interested in the slots, but not necessarily to fly PHL-LHR. If AA/US divests itself of the LHR slots (I don't believe PHL is slot-controlled, so that side is irrelevant), it could use them to open SLC-LHR - or some other surprise departure city.

Somewhere I read that the will be a four year commitment for the new carrier to operate PHL-LHR. After four years, it could fly to LHR from another U.S. city.

Quoting FWAERJ (Reply 7):
I also expect US to divest their leases for three T2 gates at ORD to NK in exchange for AA getting NK's two gates on T3 Concourse L (isn't at least one widebody-capable?) so more oneworld partners, BA in particular, can move departures to T3. NK is gate-constrained at ORD and could combine the three US gates with the City's unused Gate E8 for four gates total. As for domestic AA flights at ORD: AA's gates at T3 have enough slack to pick up all US flights and handle a major expansion at the same time.

Since the US air gates in T2 are leased from UA, we'll have to see what influence the latter will use. AA is very tight at T3 and its unwillingness to pounce on its lease options at the L concourse when Delta moved out was shortsighted. Still I do think that it could easily handle the US routes into ORD, which are PHL, PHX and CLT (not surprisingly US has stood back from the Chicago-DCA market). I see the new AA management eliminating RJs on these routes (PHL and CLT on AA) and MD80s (PHL and PHX, where AA has apparently dropped the 738 in favor of the gas guzzler MD80) and turning them into near hourly service of about 10 flights a day each.
 
FWAERJ
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 1:13 pm

Quoting AAplat4life (Reply 23):
AA is very tight at T3 and its unwillingness to pounce on its lease options at the L concourse when Delta moved out was shortsighted.

AA did want to exercise their Concourse L lease options to improve their international operations, but the Chicago Department of Aviation wouldn't let AA get the gates. The CDA wanted the gates to go to new (VX) or limited-access (B6, NK) carriers, which is what happened in the end (though AA got one of the six gates as a consolation prize).

Blame the CDA, not AA.
"Did he really need the triple bypass? Or was it the miles?"
 
panamair
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 4:03 pm

Quoting commavia (Reply 22):
I think Delta wanted to keep all LHR flying on at least 767s.

True due to the J flat-bed seating requirement for LHR, but the 75Es will get flat beds starting in 2014....
 
apodino
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 4:20 pm

Somebody aptly pointed out in an article that AA had PHL-LHR authority years ago after buying TWA's LHR authorities...but they never flew it. Granted the circumstances are much different now. But that is something I found interesting.


As for divestures...I believe that since the only two cities that overlap are BNA and RDU, Doug & crew are going to add up the total number of flights in each city...figure how how much frequency they want, and then subtract that number from the total. They will offer to divest those slots for sure since they really lose nothing. That however would be at most 4 or 5 slots (that is even generous). They will probably throw in a few more slots on top of that, probably at the expense of a couple of small stations (SRQ comes to mind), or just one frequency here and there on a few key routes (maybe even a Late Shuttle frequency). The question then becomes...who gets the slots? I think AA would fear WN getting their hands on slots right before the end of Wright to launch DAL service, even with BWI nearby. The only place B6 really threatens AA is JFK, even though the post merger AA will likely be the number 2 carrier in BOS behind B6. I believe B6 has a few frequencies to BOS already, so if B6 got hold of 20 slots, my guess is you would see something like maybe 2 more BOS, one or 2 JFKs, and a few MCO and FLL. None of these flights really will affect AA from a competitive standpoint except for maybe BOS. NK is a carrier that could launch a few non stops if they had some slots, but AA is not after the same clientele as NK, so I doubt NK will have much of an effect on anything in DCA, even if NK adds DFW. I believe WestJet has also been trying for a while to get DCA slots, and I don't think AA is concerned with them. VX would be a carrier that I think wouldn't hurt them either, but any slots VX gets are useless because they would want beyond perimeter slots.

If I had to venture a guess...I would say that it will be 20 slots divested, and I think it would be to AAs benefit to do whatever it takes to give them to airlines other than WN. So my guess is B6 gets 8, NK gets 8, Westjet will get 4. At least thats the way I would try to play it if I were Doug Parker
 
aacun
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 4:29 pm

Quoting apodino (Reply 26):

Says who that AA didnt fly the route? i worked it a couple of times as a six day trip from Miami thru London back to Phillie and reverse.it was on a 767-200.
 
Indy
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 5:42 pm

Come on DOJ... say no. This goes beyond an airport or two. Allowing this merger further increases what is becoming a very uncompetitive environment nationally. The last thing consumers need now is fewer choices and less marketplace accountability for airlines. If you are going to keep allowing these mergers then it is time to bring back airline regulation. Three massive airlines dominating this country is a very bad thing. Who here can honestly say that service has improved as a result of all these mergers? Do you feel you are treated better today than you were 10 years ago? Are prices better? Is service better? I think most of you will answer "no" to all three.
Indy = Indianapolis and not Independence Air
 
HPRamper
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 5:55 pm

Quoting Indy (Reply 28):
Come on DOJ... say no. This goes beyond an airport or two. Allowing this merger further increases what is becoming a very uncompetitive environment nationally.

So make US and AA pay the price for what DL and UA did? I don't think that's quite fair. If you have a problem with the merger environment, make UA and DL undo their mergers.

I don't recall anybody complaining to this extent about a noncompetitive environment when DL and NW merged. Maybe a little.
 
Indy
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 6:00 pm

Quoting HPRamper (Reply 29):
So make US and AA pay the price for what DL and UA did? I don't think that's quite fair. If you have a problem with the merger environment, make UA and DL undo their mergers.

Oh I would love to make them undo those mergers. But because mistakes were made in the past by allowing those mergers doesn't mean the DOJ is obligated to keep making the same mistakes over and over. If that were the case, they would be required to approve every merger until we were left with one carrier. The line in the sand has to be drawn at some point. It should have been drawn a merger or two ago. It absolutely must be drawn now.
Indy = Indianapolis and not Independence Air
 
deltal1011man
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 6:18 pm

Quoting jetblueguy22 (Reply 4):
I could see someone grabbing the route. I agree that UA is probably out, but I could see DL taking them. Is it a pair as in two roundtrips or just one? Perhaps a VS/DL pair of flights if there really are two.
Pat

Thats the only way. Adding a dot to the LHR hub.

Quoting commavia (Reply 8):
Delta/Virgin seems to me to be the only plausible alternative, but even there, I, too, question how well they might do in the market. I certainly don't think they could support more than a 763. But honestly, even that seems somewhat like a stretch to me given how much stronger AA/BA will be at both ends of the route.

agreed.

Quoting Mah4546 (Reply 15):

meh and they should be giving up any damn LHR or DCA or any other slots. (and should have more DCA slots from the gosh damn slot swap.)

But thank Goodness the gov. is still trying as hard they can to 1) drive the industry in BK 2) help the largest domestic carrier....ie WN. Seems completely fair.  
Quoting commavia (Reply 22):
I think Delta wanted to keep all LHR flying on at least 767s.

lie-flat. It would have to start on a 767 but IIRC the mods on the 757 fleet to go lie-flat start next year, and could be changed to a 757 once they get the lie-flats.
New airliners.net web site sucks.
 
MAH4546
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 6:28 pm

Quoting apodino (Reply 26):
Somebody aptly pointed out in an article that AA had PHL-LHR authority years ago after buying TWA's LHR authorities...but they never flew it. Granted the circumstances are much different now. But that is something I found interesting.

AA flew PHLLHR with its own metal in the 1990s.

Quoting commavia:
We'll see. Divested slots at LGA were forced into a blind auction system in blocks of slot pairs, but divested slots at EWR were directed to a specific recipient.

No EWR slots were divested. UA sold its slots before DOJ got involved, AA needs to trade DCA slots for JFK slots with JetBlue ASAP and actually gain a a benefit from "divesture."
a.
 
oc2dc
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 6:38 pm

I'm confused about the LHR slots that they might have to give up. If I counted correctly, I believe UA has more flights to LHR than AA. 18 for UA compared to 15 for AA. Delta currently has 10 flights out of LHR but that number is slowly growing and with the new VS deal, it will grow even more...

If AA and US merge, they will only have 17 flights a day out of LHR, still trailing behind UA. Is it that necessary to shed LHR slots? It would be incredibly unorthodox for AA to not have a hub connected to LHR. Perhaps they will have to move the RDU slot to PHL?

[Edited 2013-07-27 12:22:29]
I'm not complaining, I'm critiquing...
 
MIflyer12
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 6:40 pm

Quoting Indy (Reply 30):
Oh I would love to make them undo those mergers. But because mistakes were made in the past by allowing those mergers doesn't mean the DOJ is obligated to keep making the same mistakes over and over. If that were the case, they would be required to approve every merger until we were left with one carrier. T

That shows a fundamental misunderstanding of the competitive analysis criteria for industry mergers set out by the FTC and used by the DOJ. In fact, it calls for quite the opposite of what you assert: mergers can be approved without concessions if overlap (both non-stop and single-connect city pairs) isn't detrimental to many city pairs, and importantly, a large passenger volume on those pairs.

UA + US: DOJ said it was going to sue to stop it, and the merger plan was withdrawn

DL + NW: approved without concessions

UA + CO: approved with minor concessions

WN + FL: approved without concessions

The result is more industry concentration and thus fewer competitors on the AA+US overlapping pairs. The obligation isn't for the DOJ to allow the same consolidation option to AA + US to be 'fair' to those firms; it's to assure a reasonable level of competition on the routes where a big volume of passengers fly. If anybody wants to argue that AA and US suffer by being late to the consolidation party, blame executives who mismanaged the firms strategically. This isn't a problem for the law and merger guidelines that have been in place and used consistently for well over a decade.
 
LAXintl
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 6:46 pm

Quoting OC2DC (Reply 33):
If AA and US merge, they will only have 17 flights a day out of LHR, still trailing behind UA. Is it that necessary to shed LHR slots? It would be incredibly unorthodox for AA to not have a hub connected to LHR. Perhaps they will have to move the RDU slot to PHL?

The EU concern has to do with power of the AA-BA JV, and the loss of competition to PHL. AA/BA will become the sole carriers on the route once US is merged.

Has nothing to do with the count of individual slots, or comparing them to UA at LHR.
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silentbob
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 6:56 pm

Quoting Mah4546 (Reply 32):
No EWR slots were divested. UA sold its slots before DOJ got involved, AA needs to trade DCA slots for JFK slots with JetBlue ASAP and actually gain a a benefit from "divesture."

Actually, no EWR slots were completely divested. UA leased them to WN. I do agree that they need to present it as a done deal before the government makes any ruling.
 
oc2dc
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 7:21 pm

Quoting LAXintl (Reply 35):
The EU concern has to do with power of the AA-BA JV, and the loss of competition to PHL. AA/BA will become the sole carriers on the route once US is merged.

DL is the sole carrier on LHR-MSP/DTW and yet they are able to continue with VS without being scrutinized...
I'm not complaining, I'm critiquing...
 
nutsaboutplanes
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RE: AA/US To Make Concession To US DOJ

Sat Jul 27, 2013 7:30 pm

Quoting MIflyer12 (Reply 34):
This isn't a problem for the law and merger guidelines that have been in place and used consistently for well over a decade.

It most certainly is.

By allowing 6 airlines to merge in the past, the DOJ/DOT allowed the market to change. By not allowing AA and US to merge, they would place these two carriers at a severe disadvantage. I challenge anybody to find a market where an airline has completely run a muck pricing wise post-merger where price increases were NOT driven by fuel.

The DOT/DOJ have little latitude to work with here and they know it. US and AA are doing the right thing by offering a proactive plan; ultimately, they will get back everything that they lose and then some over time.
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RyanairGuru
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RE: AA/US To Make Concession To US DOJ

Sun Jul 28, 2013 7:38 am

Quoting OC2DC (Reply 37):
DL is the sole carrier on LHR-MSP/DTW and yet they are able to continue with VS without being scrutinized

I agree in principle, and personally think that the divesture is really harsh, but I guess the difference is that VS don't fly to MSP and DTW. Therefore DL have always had a monopoly on those routes. In comparison, BA and US both currently fly LHR-PHL. With the merger they both become one and the same thing.

Is there any restriction on which slot has to be given up. Could AA and BA do a quick deal to transfer a peak-time TATL slot from AA to BA, in return for one of the less-optimal slots that BA acquired from BD which are only useful for short-haul, say 20:45 arrival, 21:50 departure, which is then graciously divested? That could be fun to watch  
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jumpjets
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RE: AA/US To Make Concession To US DOJ

Sun Jul 28, 2013 10:51 am

Quoting jfk777 (Reply 6):
This will not be an only BA flown route, if that were to happen then AA could tell BA to stop flying to DFW and give that route to AA.

As I understand it AA handed over its BOS-LHR rotation to BA, so I guess where economic sense dictates this could happen on other routes - I don't know the economics of LHR-DFW to comment - it just seemed that from what other commenters have said, if US is dependent on Star connecting traffic for its LHR-PHL to be viable then pride aside, the economics might work better with increased capacity from BA.
 
jfk777
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RE: AA/US To Make Concession To US DOJ

Sun Jul 28, 2013 1:19 pm

Quoting jumpjets (Reply 40):
As I understand it AA handed over its BOS-LHR rotation to BA, so I guess where economic sense dictates this could happen on other routes - I don't know the economics of LHR-DFW to comment - it just seemed that from what other commenters have said, if US is dependent on Star connecting traffic for its LHR-PHL to be viable then pride aside, the economics might work better with increased capacity from BA.

LHR to DFW is 1 BA 744 and 3 AA 777/767 daily, its AA's main hub. Its doubtful US depends much on Star for PHL to LHR since US has flown to PHL to LGW for years before moving to LHR, BMI is dead and US also flies nonstop from PHL to European Star hubs such as FRA & ZUR. With US merging into AA and alliances more connection will happen at LHR, but Philadelphia has been a long time route for decades to LHR. The new AA will fly its own planes from one of its hubs to LHR along side BA's own existing daily flight.
 
commavia
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RE: AA/US To Make Concession To US DOJ

Sun Jul 28, 2013 1:27 pm

Quoting jfk777 (Reply 41):
LHR to DFW is 1 BA 744 and 3 AA 777/767 daily, its AA's main hub. Its doubtful US depends much on Star for PHL to LHR since US has flown to PHL to LGW for years before moving to LHR, BMI is dead and US also flies nonstop from PHL to European Star hubs such as FRA & ZUR. With US merging into AA and alliances more connection will happen at LHR, but Philadelphia has been a long time route for decades to LHR. The new AA will fly its own planes from one of its hubs to LHR along side BA's own existing daily flight.

   Exactly.

AA handed BOS-LHR to BA for the same reason BA handed MAN-JFK to AA. It was a non-core, non-hub market for one carrier and could be served more effectively as a spoke to a hub by the other carrier. PHL-LHR doesn't fit that description. Each airline has a huge hub at one end - so it makes sense for both carriers to serve it, just as with the DFW/ORD/MIA/JFK/LAX-LHR markets, where both airlines still operate jointly alongside each other.

In fact, I expect PHL-LHR (and CLT-LHR) to see increased frequency and capacity post-merger. As connections presently focused on FRA/MUC with Lufthansa are largely shifted over LHR with BA, capacity will likely move to match. I suspect PHL-LHR and CLT-LHR will eventually get upgraded to 777s, and I also think a second daily flights on BA CLT-LHR, and a second AA flight PHL-LHR (perhaps summer seasonal) are plausible.
 
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jfklganyc
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RE: AA/US To Make Concession To US DOJ

Sun Jul 28, 2013 1:37 pm

Quoting MIflyer12 (Reply 34):
UA + CO: approved with minor concessions

UA handed over every single EWR slot. Not a minor concession at COs most important hub.

A slot controlled airport where one carrier owned 60% of the slots pre merger.

See a parallel to DCA?

UA/CO just did it before the govt forced them to
 
usflyer msp
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RE: AA/US To Make Concession To US DOJ

Sun Jul 28, 2013 1:58 pm

Quoting jfklganyc (Reply 43):
UA handed over every single EWR slot. Not a minor concession at COs most important hub.

A slot controlled airport where one carrier owned 60% of the slots pre merger.

See a parallel to DCA?

UA/CO just did it before the govt forced them to

Not quite the same. UA/CO had 100% overlap on their routes from EWR while US/AA only compete on two routes at DCA. They will probably only have to divest the 7 overlapping slots because the competitive situation on the other routes will not have changed.
 
commavia
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RE: AA/US To Make Concession To US DOJ

Sun Jul 28, 2013 2:03 pm

Quoting jfklganyc (Reply 43):
UA handed over every single EWR slot. Not a minor concession at COs most important hub.

A slot controlled airport where one carrier owned 60% of the slots pre merger.

See a parallel to DCA?

UA/CO just did it before the govt forced them to

Okay, but the comparison that since UA gave up every one of their EWR slots so AA should/will be forced to do the same at DCA misses a critical point. The outcome of the UA slot sale at EWR - which was acceptable to regulators - still resulted in UA controlling more of the slots at EWR than AA will have at DCA. Let's focus on the outcome. Regulators accepted the outcome of UA controlling a substantial majority of the slots at EWR. (By the way - what is that percentage? 70%? 75%?)

Either way, I see no possible justification for confiscating all of AA's DCA slots, particularly given the fact that there is so little overlap between the two carriers. Confiscating the entirety of AA's current DCA slot holdings would have the net effect of simply forcing DCA's largest carrier, that provides the vast majority of its service to small and limited-entry markets, to stop a not-insignificant level of that unique service. And that, really, is the critical question: if the replacement of nonstop service from DCA to small markets with more 737s to Florida the public policy federal regulators want to pursue?

[Edited 2013-07-28 07:05:12]
 
FlyPNS1
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RE: AA/US To Make Concession To US DOJ

Sun Jul 28, 2013 2:32 pm

Quoting commavia (Reply 45):
And that, really, is the critical question: if the replacement of nonstop service from DCA to small markets with more 737s to Florida the public policy federal regulators want to pursue?

That's not regulators decision to make. Regulators are supposed to ensure that there is fair competition and access to public facilities.

And honestly, if WN won the slots, I doubt they'd use them all to Florida. You'll note that WN's most recent slots have gone to markets like STL and HOU. These were markets with no competition and high fares to DCA.

Quoting commavia (Reply 45):
Either way, I see no possible justification for confiscating all of AA's DCA slots, particularly given the fact that there is so little overlap between the two carriers.

I agree on this one and I don't expect the DOJ/DOT will demand that. I could see something in the ballpark of 10-20 slot pairs. US/AA could easily cough up that many slots and not hurt any small communities. Though I suspect they would still cut some small communities just to be spiteful and make a point.
 
msp747
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RE: AA/US To Make Concession To US DOJ

Sun Jul 28, 2013 2:49 pm

Quoting apodino (Reply 26):
So my guess is B6 gets 8, NK gets 8, Westjet will get 4

NK had slots at DCA, but abandoned them and moved its operation up to BWI. They won't have any interest in acquiring those slots

Quoting nutsaboutplanes (Reply 38):
By allowing 6 airlines to merge in the past, the DOJ/DOT allowed the market to change. By not allowing AA and US to merge, they would place these two carriers at a severe disadvantage.

  

We could argue all day whether the DL-NW merger should have happened, but it did. Then came UA-CO. So on what grounds could the government reject this deal, when it has already allowed two mega-carriers to be formed? If anything, they probably would see adding a third mega-carrier as additional competition for UA and DL, even if it meant the end of a smaller airline. If you want to stop this cycle, the DOJ needs to put its foot down if and when the new DL, UA, or AA try to swallow up another small carrier, say a B6 or AS
 
LAXintl
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RE: AA/US To Make Concession To US DOJ

Sun Jul 28, 2013 5:52 pm

Quoting msp747 (Reply 47):
NK had slots at DCA, but abandoned them and moved its operation up to BWI.

In fairness they made some money from the asset. Southwest bought 4 slots.

Southwest Buys Spirit DCA Slots (by LAXintl Jul 3 2012 in Civil Aviation)

=
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SESGDL
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RE: AA/US To Make Concession To US DOJ

Sun Jul 28, 2013 5:59 pm

Quoting msp747 (Reply 47):
We could argue all day whether the DL-NW merger should have happened, but it did. Then came UA-CO. So on what grounds could the government reject this deal, when it has already allowed two mega-carriers to be formed?

I keep seeing this same argument. This would then apply to every merger down the road as well. What happens if AA/DL or UA/AA or UA/DL try to merge? How but WN and the bunch? Do they again say, well DL/NW and UA/CO and AA/US were allowed to merge so it would be unfair not to let us merge? It has to stop somewhere. The AA/US merger is happening, but the government really needs to put the kibosh on any further mergers. The environment is such that carriers can operate profitably while still providing a decent amount of competition for travelers. However, any large mergers after this will be entirely anti-competitive and should be stopped, though I don't foresee that happening. I don't foresee any large mergers over the next few years, but like every industry nowadays, it will start again. And someday the juggernauts will be pleading their case that they need to merge to stay competitive, blah blah blah, and these same arguments we keep hearing now will be rehashed.

Jeremy