You said: --Should US Airways shut down, years from now, other airlines would pick up their routes, probably with little interruption if any. And US Airways employees would have jobs.
I think this about the most naive post I have ever seen. To believe that a major airline could go out of business and have little or no interuption in service in its cities is a fantasy. In fact, to believe that other airlines would pick up all of the routes without disruption is fantasy as well. I find it hard to believe that an educated individual such as yourself can not envision the massive economic impact that the shutdown of a company of this size would have. You also failed to answer any of the questions I posed in my last posting to you.
Yes folks, I disagree with DCA-ROC's assertion that if US Airways and United merge than every other major airline in the country will merge again resulting in a "Big 3". That seems to be the basis of his entire argument and I absolutely disagree that it will happen.
I do believe that the shutdown of US Airways would leave the country with 6 major airlines (including Southwest--unfortunately there will be massive turmoil in the interim as this vital link to the east coast network is disolved.
I also believe that, should the merger take place, there will STILL be 6 major airlines (including Southwest). The number of competitors in each situation remains the same.
I further assert that the major network airlines do not compete in price anyway. Low fare and discount air carriers moving into markets drive fares lower...not competition from other majors.
Furthermore the GAO report failed to mention, except in small print on the last page, that the 260+ city-pairs that would lose a competitor did NOT include the creation of DC-Air. With Bob Johnson prepared to announce his choice for a major airline partner in January, DC-Air will most likely get an enthusiastic nod from the DOJ. (If Delta is a 49% partner, DCAir will not need to rely on United at all...all part of a carefully formulated plan by Wolf to appease DOJ concerns.)
According to the SEC filing, DC-Air will take over the entire Washington DCA hub from US Airways along with certain hub-to-hub routes.
In conclusion a few points:
1. Regardless of whether the merger succeeds or fails the result will be 6 major airlines (including Southwest)
Competition will still be strong.
2. The merger and creation of DCAir will ensure that the entire US Airways network is upheld and that there is no lapse in service as there would almost certainly be as US Airways downsized and eventually failed.
3. The merger ensures that the 46,000 employees of US Airways and the hundreds of thousands of support employees in hub cities (taxi drivers, car rental employees, restaurant and hotel employees, bus drivers, parking lot attendants, etc....) remain employed and at salary and benefit levels equal to their years of service. The NEW Economy will allow YOU, Jim, to move to another job and retain a very similar scale of pay and benefits. With a heavily unionized industry such as the airline, we would all return to newhire payscales and benefits under your scenario. If you dont believe that will have an economic impact on our cities and towns you are again naive.
4. US Airways themselves have stated in a press release responding to Senator Oberstar that the status quo is NOT an option. Airline historians know full well that when Stephen Wolf says something like that it is not an idle threat. I belive that within 18 months US Airways will be gone...one way or another.
5. Airlines are a public utility and you deserve to have that utlity at a reasonable price??? Gimme a break. I think that Mercedes is a public utility and I should have a convertable at a reasonable price. The fact is that this industry has been deregulated and if you expect companies to survive you must let them set prices at a level which they need to set them in order to be profitable. If that means higher prices in cities like Ithaca and Elmira then so be it! Supply and demand dictates the fares! Dont like it? Vote with your feet...drive to Buffalo and fly AirTran or Southwest. Trust me, when the airplanes arent full, marketing will lower the prices. I dont see how airlines are expected to make money with this "shadow regulation".
6. The DOJ is prohibited by law from sueing to block a merger based on what "might" happen. Saying that the industry WILL consolidate is conjecture and can not be used in a DOJ ruling. -- and yes folks, the DOJ can not simply "BLOCK" a merger...they can only sue to block it. If UAL and US believe that they can win that suit they can continue with their plans to merge and take the DOJ to court, for years if necessary, to prove that this merger is not anti-consumer.
7. I dont advocate that this merger should take place in order to "Save US Airways from its problems" -- but I DO insist that if you're using "less competition = higher prices" as your reasoning for why this merger should be blocked that you consider the future of US Airways without the merger. 6 network competitors is 6 network competitors regardless of how you count.
8. AirTran, Vanguard, Midway, Frontier, Alaska, America West, National, Midwest Express, TWA, PanAm, Sunjet, ATA...and if you choose not to include it as a major, Southwest. 13 other regional competitors??? I'm sure I've forgotten a few. Exactly how much competition is required in the airline industry to bring your fares to an acceptable level? How much competition in the oil industry? In the automotive industry? Too much competitions dilutes the market and weakens the airlines. Is that how we want to enter the global aviation marketplace? With weak competitors. I submit that one or two mergers to consolidate this industry is HARMLESS when you have in excess of 20 competitors. No other country in the world has this much competition in their airline industries.
9. Factoring inflation airline tickets are less expensive today than they were in the 1970s.
Factoring inflation airline employee salaries have trended downward every year since 1980. (not including the recent United pilot contract)
Folks, today at the gas pump is cost me $1.55 a gallon to fill my car. What did that cost in 1970? Flying airplanes is expensive business. I honestly believe that air travel is FAR less expensive than it should be in the year 2000. Airline profit margins are unacceptably thin.
This is not a charity, its a business.
10. Senator Oberstar from MN and attorney Mike Hatch from MN have the largest arguments against this merger...can you think of anything that has headquarters in MN that might sway their opinion? Anything that made an $18,000 campaign contribution to Oberstar perhaps? (hint...it has a red rail and looks a lot like a bowling shoe...)
Anyone else have anything to say about this merger? Perhaps McCain? oh wait...he's from Arizona....anybody in Arizona that wouldnt want this to take place? Damn interesting that when America West was going to merge with United he didnt have a thing to say about that.
These companies have an 8% route overlap decreased to 2% after the creation of DC-Air.
DC-Air will NOT be reliant upon United due to Johnson's sale of 49% of the company to another network major due to be announced in January.
Of the 5000 most heavily traveled city-pairs in the country the GAO report found approximately 250 where competition would be decreased as a result of the merger (5%) and those numbers AGAIN did not take into account the creation of DCAir
The DOJ is NOT in the business of "blocking mergers", their only job is to ensure that there has been no violation of the nations antitrust laws. There is no law preventing a company from being "Big".
It is not a constitutional right for the public to enjoy low airfares. Certain companies have been created that offer such airfares and they are very successful with that formula. In a deregulated environment companies are free to price their product based on basic economic formulas. If you have difficulty understanding supply and demand perhaps you should ask a 5th grader to explain it to you.
Network air carriers do not compete in price. While not technically "price fixing" they price very similarly. Hence the "fare wars" each summer...one airline lowers fares the rest follow...if one of them fails to follow the remainder of them snap back to their original prices. Major airlines do not compete in price. One more or less will not make a difference. Only the introduction of Southwest or AirTran into markets will add fare-pressure.
I'm sorry that you dont understand the need for a globalized airline industry in today's economy.
I'm sorry that your airfares are too high in Rochester.
The only thing I can suggest is Go Greyhound...
because this merger's gonna fly!
(If it doesnt you'll find me at Wall Mart handing out carts because...either way US Airways is not long for this world)