Is It Time For JetBlue & Virgin America To Merge?

wnflyguy · Thu Jan 07, 2016 12:36 am

With the current speculation of a Spirit and Frontier merger on the horizon.
Wouldn't this be the time for B6 and VX to consider a merger.
A strong bigger NK going to make it much harder on the future of both B6 and VX.

Merging B6 and VX would give B6 it's much needed presents in the West coast.
Yes B9 has LGB,OAK and SFO.
LGB has seen it's prime come and go it's failure these days to attract new customers.
A merger with VX would give B6 the much needed larger footprint in LAX.
Not only terminal space but codeshares via international partners.
Could easily fuel growth of it's Mint products.
As for LGB may not be good with either a complete pullout or reduced flying.
I could easily see LGB scale down to red eye only service to JFK and BOS.
And use remaining LGB slots to fuel competition between LGB-SFO.
This would strengthen connecting traffic to a new larger SFO network plus international partners.

VX SFO operation would without question finally give B6 it's bigger footprint in the Bay Area.
B6 half ass shift from OAK to SFO pre VX and post WN dumping SFO for a hot minute.
B6 had an awesome opportunity with then struggling UAL and WN wrong decision short lived pull out of SFO.
But old B6 management kept playing with limited resources In LGB and missed a great opportunity..
With a B6 And VX merger would give the merged airline great opportunity to connect they dots In the B6 network.
Easy additions would be SFO-BUR,SFO-SLC,SFO-RNO and SFO-ABQ.

Flyguy

smi0006 · Thu Jan 07, 2016 12:43 am

I just like the return of Virgin Blue- DJ predecessor to Virgin Australia VA. Although the Aussie joke by which we call red heads Bluey maybe lost on most Americans.

Fleet, network, and product seems a good fit. But are either owners interested?

a320fan · Thu Jan 07, 2016 12:45 am

I would think they would match up pretty well. Would be instant growth on the west coast for B6, though whether it would be profitable growth is another question.

If it was to happen I imagine the VX aircraft would quickly be reconfigured to standard B6 configuration, with the A319s phased out as quick as possible.

stlgph · Thu Jan 07, 2016 12:55 am

Oy. This again.

JetBlue is a one trick pony. Its major successes come from NYC/Northeast to Florida. The rest is far secondary and greatly expanding that secondary just brings more secondary.

toltommy · Thu Jan 07, 2016 1:03 am

Quoting wnflyguy (Thread starter):
A strong bigger NK going to make it much harder on the future of both B6 and VX.

No it won't. NK markets to a different customer than B6 and/or VX. NK sells on price. Period.

What percentage of traffic does B6 connect at JFK vs VX at SFO? I may be wrong, but it seems like VX is carrying more point to point traffic.

I don't think another barbell shaped route map is going to work if they merged.

Flighty · Thu Jan 07, 2016 1:07 am

It could work. I am a fan of both B6-VX and NK-F9 linking up.

These airlines are undersize. It is a returns to scale thing. In addition, icing on the cake is getting rid of 4 airlines' most similar competitors. And regulators will approve.

Both should happen in 2016 IMO, engineered by Wall St if necessary. Mgmt teams who play ball will be rewarded.

STT757 · Thu Jan 07, 2016 1:20 am

Quoting wnflyguy (Thread starter):
Wouldn't this be the time for B6 and VX to consider a merger.
A strong bigger NK going to make it much harder on the future of both B6 and VX.

What does VX offer that B6 couldn't replicate themselves, look what WN has done in Denver. They went from no service to Denver to 179 daily flights to 22 cities in ten years. All without having to takeover F9. VX has no valuable landing slots at slot controlled airport, LGA, JFK, EWR, DCA etc.. nor do they have valuable International route authorities.

Quoting stlgph (Reply 3):
JetBlue is a one trick pony. Its major successes come from NYC/Northeast to Florida. The rest is far secondary and greatly expanding that secondary just brings more secondary.

Exactly, if B6 should merge with anyone it should be with the new Eastern. That way they can change their name to something that's more representative of who they are. Southwest airlines over the course of 20 years was able to shed their "Southwest" name and become a true national carrier by systematically establishing themselves in large markets outside of their "Southwest" beginnings. First was Chicago Midway, then Orlando, then Baltimore, then Philadelphia, Denver, Laguardia, DCA, EWR, BOS etc..

Jetblue merging with VX is not going to solve their Eastern problem, it would be like when US merged with PSA. They had a huge operation on the East Coast, a large operation in California and really nothing in between.

B6 should take a systematic approach like WN to grow outside of the Eastern seaboard. Look for opportunities to establish a focus city in the Southeast, Mid-West or Texas.

bcoz · Thu Jan 07, 2016 1:27 am

I'm just throwing this out there, but do you all feel that the B6 and VX brands/products are congruous? It would seem to me that the VX brand and product would have to be the surviving one... and I'm not sure how that would play in the B6 East Coast markets. I normally wouldn't be so skeptical about the merging of a product/brand, but here I am.

stlgph · Thu Jan 07, 2016 1:51 am

Quoting Flighty (Reply 5):
It could work. I am a fan of both B6-VX and NK-F9 linking up.

What an amazing idea. Actually let's keep going and just have one airline so eventually a ticket to anywhere becomes next to cost prohibitive. Competition is better for the industry than you could ever realize.

Quoting bcoz (Reply 7):

Then do one management company, two separate brands, just like hotels do it.

ridgid727 · Thu Jan 07, 2016 2:06 am

Dont think it will ever happen.

I do believe at some point you will see these 2 carriers engage carriers the likes of SkyWest, Republic, Air Wisconsin etc to operate and build markets in secondary cities and for connection bases, similar to what they do for AA, UA, DL,AS etc. As regional aircraft become more advanced and offer a lot more comfort these two companies will more than likely take a strong look at it.

jnev3289 · Thu Jan 07, 2016 2:09 am

New thread topic: should AA,UA, and DL merge?

VS4ever · Thu Jan 07, 2016 2:15 am

to be honest, no, no and no, no more mergers. like we really need to take more competition out of the market...

There have been so many of these threads, it's almost worth having a completely separate forum for merger and financials.

N809FR · Thu Jan 07, 2016 2:22 am

I am so sick of airlines merging. Who does it benefit? Not the consumers that's for sure. The loss of America West, Northwest, Continental, and now US Airways hasn't benefited anyone other than creditors and shareholders. DOJ should have never approved US/AA or realistically UA/CO. Stop suggesting merger possibilities as if they're actually beneficial. It's made ticket prices stupidly expensive outside of heavy LCC markets.

panam330 · Thu Jan 07, 2016 2:29 am

Quoting Flighty (Reply 5):
These airlines are undersize. It is a returns to scale thing. In addition, icing on the cake is getting rid of 4 airlines' most similar competitors. And regulators will approve.

No, they're not. The problem here is that the scale is skewed larger because the DOT allowed the current mergers to take place when realistically, they shouldn't have allowed all three. With oil this low, and profits like this never before seen, there is no possible argument in favor of reducing competition that would ever be considered a valid case for a merger. None. If you can't make a go of it in the current environment, your business model just plain sucks.

sxf24 · Thu Jan 07, 2016 2:35 am

I actually think an AS/VX merger makes more sense from a network perspective. There'd be some product differences to reconcile, but the customer-focused cultures align nicely.

JetBlueCLT · Thu Jan 07, 2016 2:39 am

Short and simple, no

Boeing778X · Thu Jan 07, 2016 2:48 am

Why would we want another merger?

VX and B6 are some of our biggest gems here in the U.S.! No thank you!

If anything, we need more airlines! Hell, I'd love to start one someday!

catiii · Thu Jan 07, 2016 2:50 am

Quoting wnflyguy (Thread starter):

Quoting wnflyguy (Thread starter):
Merging B6 and VX would give B6 it's much needed presents in the West coast.
Yes B9 has LGB,OAK and SFO.

Aside from the myriad spelling errors here, B6 has its west coast focus city at LGB and is expanding Mint service out of LAX, a service I might note that far surpasses VX.

Quoting STT757 (Reply 6):
Exactly, if B6 should merge with anyone it should be with the new Eastern. That way they can change their name to something that's more representative of who they are. Southwest airlines over the course of 20 years was able to shed their "Southwest" name and become a true national carrier by systematically establishing themselves in large markets outside of their "Southwest" beginnings. First was Chicago Midway, then Orlando, then Baltimore, then Philadelphia, Denver, Laguardia, DCA, EWR, BOS etc..

Last I checked Southwest was still called Southwest. The brand always wins out, and the JetBlue brand far surpasses the Eastern brand. Also we're now advocating that JetBlue worry about merging with a carrier whose claim to fame so far is hauling the Florida Panthers around?

Quoting STT757 (Reply 6):
Jetblue merging with VX is not going to solve their Eastern problem, it would be like when US merged with PSA. They had a huge operation on the East Coast, a large operation in California and really nothing in between.

JetBlue has an Eastern problem? Did I miss something? Is the new Eastern some kind of powerhouse I'm not aware of?

frmrCapCadet · Thu Jan 07, 2016 3:04 am

Strengthening existing 2nd tier airlines to compete with the big 3 and WN is not a bad idea. I suspect that 6 major airlines would restore competition.

Alias1024 · Thu Jan 07, 2016 3:12 am

A B6/VX merger could bring some benefits. It's obvious what JetBlue brings to the table with their east coast network. VX doesn't bring as much, but the gate space and network at SFO would be valuable and the consolidation in some transcon markets might help the combined carrier.

Quoting N809FR (Reply 12):

The loss of America West, Northwest, Continental, and now US Airways hasn't benefited anyone other than creditors and shareholders.

How about the employees of those airlines that are now working for far more stable and profitable companies, in many cases after receiving significant pay raises?

How about the slew of amenities and improvements that have been added in recent years? The now financially stable airlines are able to invest in their product, bringing back snacks and food on some flights, improving meals on others, adding power ports and wifi, investing heavily in their apps and technology to make it easier to rebook customers during irops, etc.... There's a lot that's been spent to make the travel experience smoother and better once you're done getting harassed by TSA.

I also don't understand the argument that it's somehow bad that shareholders benefit from a merger. First, they own the businesses and put their money at risk. Why shouldn't they benefit? Second, I'd bet a large percentage of posters on this site and the flying public in general ARE shareholders, even if they don't realize it. AA, DL, WN, and UA are all S&P 500 components so it's likely that a large majority of Americans that hold mutual funds in either retirement or taxable accounts are in fact indirect owners of those airlines through their mutual funds.

deltal1011man · Thu Jan 07, 2016 3:20 am

Why would B6 want VX?
As soon as fuel goes back up the VX operation turns into a bottomless pit
and VX set up in two airports that are quickly running out of room to grow.

Quoting jnev3289 (Reply 10):
New thread topic: should AA,UA, and DL merge?

PMAA/DL I would be fine with. Now with US not so much.

DL management though.

BravoEchoNov · Thu Jan 07, 2016 3:28 am

The combined airline still wouldn't operate to ATL.

jfklganyc · Thu Jan 07, 2016 3:33 am

I think a merger would be fine.

I think both staying alone would be fine too.

Quoting wnflyguy (Thread starter):
But old B6 management kept playing with limited resources In LGB and missed a great opportunity..

You think? I dont think SFO was a great opportunity. VX has just started making money over the last 2 years. Most of their existence, they burned $$ as they battled lots of competition on every route they started.

JFK worked because TWA was dying, AA got caught looking, and the DL response (while forceful) was several years too late. By time they tried to stop B6, B6 was already a powerhouse.

flyby519 · Thu Jan 07, 2016 3:55 am

Quoting deltal1011man (Reply 20):
Why would B6 want VX?
As soon as fuel goes back up the VX operation turns into a bottomless pit
and VX set up in two airports that are quickly running out of room to grow.

B6/VX would be the lowest transcon competitor. Instead of fighting against each other they could focus on battling the legacies.

B6/VX could trade DAL gates to WN in exchange for LGA/DCA slots.

VX fits with the 'high value geography' ideal that has driven B6 to success. LAX/SFO would be great for B6 hubs.

The combined carrier could either dump LGB completely, or strong arm them into changing the way they operate the airport

deltal1011man · Thu Jan 07, 2016 4:14 am

Quoting flyby519 (Reply 23):
B6/VX would be the lowest transcon competitor. Instead of fighting against each other they could focus on battling the legacies.

reducing overlap on a few routes is a bad reason to take on an airline with very questionable numbers like VX.

Quoting flyby519 (Reply 23):

B6/VX could trade DAL gates to WN in exchange for LGA/DCA slots.

you really think the US government will let WN have a complete monopoly at a capacity limited airport?

Quoting flyby519 (Reply 23):
The combined carrier could either dump LGB completely,

And move that capacity to......? (If your answer is LAX I'll ask what gates, and if SFO I'll also ask what space, the airport is, IIRC being looked at being put on a LGA/JFK/EWR slot program)

Quoting flyby519 (Reply 23):
or strong arm them into changing the way they operate the airport

haha change the way people in California think about things like noise and pollution......in the LA area.....

that might be the funniest thing I have seen on here.

jetbluefan1 · Thu Jan 07, 2016 4:15 am

Quoting stlgph (Reply 3):
JetBlue is a one trick pony. Its major successes come from NYC/Northeast to Florida. The rest is far secondary and greatly expanding that secondary just brings more secondary.

While I agree B6's bread and butter is NYC/Northeast to Florida (which is by far the busiest domestic market in the US, perhaps the world), it is far from a one trick pony. Consider the dominant NE-Caribbean and Florida-Caribbean/LatAm network, leading BOS network, FLL expansion, and highly successful and growing Mint offering - it's clear that B6 is diversified and has promising growth opportunities.

Quoting toltommy (Reply 4):
No it won't. NK markets to a different customer than B6 and/or VX. NK sells on price. Period.

There is certainly material overlap in the type of customer that B6 and NK cater to. I love B6 but if NK is cheaper by a wide margin (after all the add-ons), flying a reasonable schedule, I will fly NK. I bet there are many people who feel the same way.

Quoting STT757 (Reply 6):
B6 should take a systematic approach like WN to grow outside of the Eastern seaboard. Look for opportunities to establish a focus city in the Southeast, Mid-West or Texas.

Where? B6 already has 2 focus cities in the Southeast. Texas, with oil at 11-year lows, and relative failure by B6 to penetrate successfully, seems unfeasible.

If ORD had gate space, I actually think it would work for B6. It's the third largest domestic market with a high concentration by 2 legacy carriers and WN at MDW. It's certainly much less fragmented than LA.

Quoting jfklganyc (Reply 22):
You think? I dont think SFO was a great opportunity. VX has just started making money over the last 2 years. Most of their existence, they burned $$ as they battled lots of competition on every route they started.

I think B6 was wise to establish itself at JFK, FLL, and BOS. But I think LGB should have been swapped with SFO. If B6 decided to introduce SFO as a focus city in 2002 instead of LGB, VX would not exist today.

MAH4546 · Thu Jan 07, 2016 4:32 am

Frontier and Spirit aren't merging, it isn't even "speculation," just A.net chatter.

And JetBlue and Virgin aren't merging either.

Never mind the fact the government is already investigating airlines for their practices, and it's doubtful they will allow airline mergers for a bit.

flyoregon · Thu Jan 07, 2016 5:40 am

Quoting sxf24 (Reply 14):

I actually think an AS/VX merger makes more sense from a network perspective. There'd be some product differences to reconcile, but the customer-focused cultures align nicely.

It doesn't make any sense what so ever. Of all of the annoying "who's merging next" threads on this website, AS/VX seems the most unlikely. If Alaska were to hook up or acquire anyone, Sun Country would be the one I'd go for. But even that won't happen just as B6/VX and NK/F9 isn't going to happen.

LAX772LR · Thu Jan 07, 2016 6:13 am

Quoting stlgph (Reply 3):
JetBlue is a one trick pony.

Quoting STT757 (Reply 6):
look what WN has done in Denver. They went from no service to Denver to 179 daily flights to 22 cities in ten years.

Let's not pretend that the circumstances of their reentry into DEN were typical of just about anything they see in the market.

DEN was basically where WN rerouted the aircraft affected by Hurricane Katrina. 60daily flights that had to go somewhere, almost overnight. HOU and DEN were the beneficiaries.

Great for the market that it was able to absorb the huge additional they went in with (and use that as critical mass to build a focus base), but it's not like such a thing will likely ever happen in WN (or really, any US airline's) system again, barring the recurrence of some similar tragedy.

Quoting N809FR (Reply 12):
I am so sick of airlines merging. Who does it benefit? Not the consumers that's for sure.

Why are you so sure?

Can we see the analysis you're using to reach that conclusion?
...the one that juxtaposes fares, routes, amenities (for those who can/will pay for them) between pre-merger and post-merger years.

Make sure you include the national cost/benefit to taxpayers, from (finally) having profitable airlines with robust work forces, versus perpetually bankrupt carriers with frequent layoffs/furloughs that prompt affected members to utilize the welfare and unemployment system.

tortugamon · Thu Jan 07, 2016 6:20 am

Quoting STT757 (Reply 6):
What does VX offer that B6 couldn't replicate themselves

SFO and LAX slots while removing a competitor with a similar business model and adding scale should offer some value.

Quoting stlgph (Reply 8):
What an amazing idea. Actually let's keep going and just have one airline so eventually a ticket to anywhere becomes next to cost prohibitive. Competition is better for the industry than you could ever realize.

A merger between one airline with 5% market share and another with 1% hardly is the slippery slope to one airline. I actually think a profitable airline industry is good for consumers.

Quoting Mah4546 (Reply 26):
Frontier and Spirit aren't merging, it isn't even "speculation," just A.net chatter.

Sure sounds like speculation:
"Baldanza's Surprise Departure From Spirit Airlines May Signal Consolidation Among Low-Cost Carriers"
http://www.forbes.com/sites/kathrync...nes-may-signal-ulcc-consolidation/

Flightglobal: ANALYSIS: New Spirit chief refuels Frontier merger rumours
http://www.flightglobal.com/news/art...-refuels-frontier-merger-r-420538/

AirlineReporter: IS A MERGER BETWEEN SPIRIT AND FRONTIER INEVITABLE?
http://www.airlinereporter.com/2016/...it-and-frontier-merge-should-they/

SKIFT/Bloomberg: New Spirit Air CEO’s Most Attractive Asset Is His Merger Experience
http://skift.com/2016/01/06/new-spir...ve-asset-is-his-merger-experience/

One quote from the last article: "Depressed revenue growth across the industry could make a Frontier sale more attractive for Indigo than a stock offering."

tortugamon

stlgph · Thu Jan 07, 2016 8:13 am

Quoting jetbluefan1 (Reply 25):
While I agree B6's bread and butter is NYC/Northeast to Florida (which is by far the busiest domestic market in the US, perhaps the world), it is far from a one trick pony. Consider the dominant NE-Caribbean and Florida-Caribbean/LatAm network, leading BOS network, FLL expansion, and highly successful and growing Mint offering - it's clear that B6 is diversified and has promising growth opportunities.

Have you looked at their financials? I'm going to go with ... no

Quoting jfklganyc (Reply 22):
JFK worked because TWA was dying, AA got caught looking, and the DL response (while forceful) was several years too late. By time they tried to stop B6, B6 was already a powerhouse.

JFK worked because they had Senator Schumer in their backpocket making it work for them, screwing other airlines out of opportunities there.

EA CO AS · Thu Jan 07, 2016 8:47 am

Quoting Mah4546 (Reply 26):
Frontier and Spirit aren't merging, it isn't even "speculation," just A.net chatter.

Ehhhh....not sure I agree. Bob Fornaro's a "deal guy" - it's his thing. And at some point, ULCC consolidation makes sense, especially when their networks start to overlap.

And lest we forget, F9 President Barry Biffle was the CMO at NK once upon a time.

It's not a slam-dunk that they're merging, but this is WAY beyond a.net chatter.

stlgph · Thu Jan 07, 2016 9:55 am

Quoting tortugamon (Reply 29):
A merger between one airline with 5% market share and another with 1% hardly is the slippery slope to one airline. I actually think a profitable airline industry is good for consumers.

Who's bankrupt?

jetbluefan1 · Thu Jan 07, 2016 12:33 pm

Quoting stlgph (Reply 30):
Have you looked at their financials? I'm going to go with ... no

Yes. Are we looking at the same financials? I see growing margins driven by below-inflation cost growth (even when stripping out the cost of fuel and profit sharing), unit revenue growth, and de-leveraging.

N776AU · Thu Jan 07, 2016 1:13 pm

Quoting BravoEchoNov (Reply 21):

The combined airline still wouldn't operate to ATL.

And we need it big time after Southwest slaughtered Airtran.

jfklganyc · Thu Jan 07, 2016 1:34 pm

Quoting stlgph (Reply 30):

JFK worked because they had Senator Schumer in their backpocket making it work for them, screwing other airlines out of opportunities there.

No offense man, you are dead wrong.

DL: They were stagnant at ~100 flights

AA: They were stagnant at ~120 flights

TW: They were dying and down to 30 flights

US: Not one flight

CO: Not one flight

NW: Token presence

WN: In the worst decision in airline history, they chose ISP, yes ISP!!!, over JFK.

JFK had a bunch of crumbling terminals, JFK was NOT slot controlled before 4 pm, JFK had an almost empty TWA Terminal 6 sitting there unused for YEARS!

Any airline could have come in. None of them did.

B6 saved JFK and turned a 30 million pax airport into a 50 million + pax airport.

Without B6, you don't have the huge DL hub either.
Without B6, you don't have mainline service within the LGA perimeter

Take a look at schedules from JFK to

BUF
PWM
ROC
SYR
ROC
ORD
BOS
IAD
PBI
RSW
JAX
MCO
FLL
MSY

prior to B6 and today.

Either no service or 2 ill-timed flights to connect to the European bank in the afternoon.

DL didn't even have a morning ATL flight!

So tell me, how did B6's slot deal screw anyone? They wanted it instead? They could have had it. Anyone could have. They all missed the boat.

enilria · Thu Jan 07, 2016 1:56 pm

If SFO and LAX were heavily constrained or slot restricted I think a merger would be guaranteed, but absent that I'm not sure I see a lot of value for B6. It would be nice to get a West Coast foothold, but does VX have a West Coast foothold? LAX is a competitive mess that I'm sure B6 is loathe to step into. Getting VX out of transcontinental is a plus and SFO might offer some value, but I don't think it's super-compelling.

I'm anti-merger, but I could see it happening. I don't think it's as obvious as people think, however.

mia · Thu Jan 07, 2016 2:09 pm

Quoting jfklganyc (Reply 35):

I didn't have the numbers you just mentioned, but as I remember when Jet Blue started they were the ONLY ones offering domestic product out of JFK, something every other airline said "could not be done". While I do not doubt there were under the smoky room dealings and what not, I am sure a burgeoning start up doesn't really have that much to offer other than failure of a business model. Neeleman and his backers took a gamble and it worked. Hindsight is 20/20 when looking at strategic failures of other airlines to recognize market opportunities.

STT757 · Thu Jan 07, 2016 2:45 pm

Quoting tortugamon (Reply 29):
SFO and LAX slots while removing a competitor with a similar business model and adding scale should offer some value.

There are no slots at SFO and LAX, the only slot controlled airports in the US are EWR, JFK, LGA, DCA. Anyone could add any flights to LAX or SFO, which is why a merger with VX brings no value to B6. B6 can add flights at LAX and SFO themselves.

richierich · Thu Jan 07, 2016 2:58 pm

Quoting stlgph (Reply 30):
JFK worked because they had Senator Schumer in their backpocket making it work for them, screwing other airlines out of opportunities there.

At best, that's a misleading and misguided statement. At worst, it is just plain wrong.

Quoting stlgph (Reply 30):
Have you looked at their financials? I'm going to go with ... no

JetBlue starts 2016 very healthy. There are some issues to work out, namely trimming the non-fuel cost structure, but their revenues are very strong, and this goes well beyond NE-Florida routes. As others have mentioned, Mint seems to have exceeded expectations and there is room to grow there, and the continued Caribbean growth seems to imply that is a strong region for them. Looking forward five years, my biggest question is not a merger (or bankruptcy, ha!), but will they take the next big step and go for widebodies? At some point, to retain JFK, I think they are going to have to but that is my opinion. That will be a huge (and expensive) step for them, and whomever makes that decision will potentially risking the future of the airline when that time comes.
As for their financials, if you have read them, did you understand them? I'm going to go with.....no.

STT757 · Thu Jan 07, 2016 3:04 pm

Quoting richierich (Reply 39):
At best, that's a misleading and misguided statement. At worst, it is just plain wrong.

Jetblue's first week of operations in 2000 had them launch two routes, FLL and BUF. I've been to Buffalo, are you going to argue there's not a quid pro quo for Schumer's support by making Buffalo one of their first destinations? Before Orlando?

frmrCapCadet · Thu Jan 07, 2016 3:22 pm

Any economist with background as to how many strong players we need to avoid monopoly pricing? My suspicion is more than 3. I suspect even 4 would get it close.

wnflyguy · Thu Jan 07, 2016 3:45 pm

Man I really need to spell check before I post.

Now I think jetBlue buying VX would give them a huge advantage to expand the mint product from LAX and SFO.
Given the terminal and gates VX has in both LAX and SFO would give B6 a lot more flexibility.

Flyguy

catiii · Thu Jan 07, 2016 4:21 pm

Quoting STT757 (Reply 40):
Jetblue's first week of operations in 2000 had them launch two routes, FLL and BUF. I've been to Buffalo, are you going to argue there's not a quid pro quo for Schumer's support by making Buffalo one of their first destinations? Before Orlando?

Relax. It was very public that in exchange for getting JFK slots they had to agree to upstate New York service. Nothing nefarious or backroom about it.

"He astutely played on the frustrations of state legislators who had long clamored for lower fares and better service from New York City to upstate areas. In part by promising to service Buffalo, Rochester, and Syracuse, he won the right to fly 75 daily flights in and out of JFK. He's kept his word and also used his JFK "slots" to fly the much more lucrative New York to Florida routes..."

http://money.cnn.com/magazines/fsb/fsb_archive/2003/05/01/343395/

S75752 · Thu Jan 07, 2016 4:26 pm

I think that some kind of partnership or faux-alliance would be the first consideration before one can even think of a merger.

...Not that that stopped 2/3 of the legacy mergers.

Flighty · Thu Jan 07, 2016 4:35 pm

Quoting panam330 (Reply 13):
No, they're not. The problem here is that the scale is skewed larger because the DOT allowed the current mergers to take place when realistically, they shouldn't have allowed all three. With oil this low, and profits like this never before seen, there is no possible argument in favor of reducing competition that would ever be considered a valid case for a merger. None. If you can't make a go of it in the current environment, your business model just plain sucks.

Oh I agree that competition is good. And I agree that mergers are not desirable per se. But equal protection would dictate that a maximum firm size would apply to all players, such as AA, UA, NK, etc.

These smaller LCC mergers would face no problem. If more competition is needed (and it is) then airlines like AA or UA would be given a choice to either shrink, or be broken up into non-ATI rival companies. It does not satisfy equal protection to say one company can have 1,000+ aircraft in a network but for the competitor, 200 is too many. That would not fly. It would not be possible for regulators to deny these mergers. Sorry. That decision was made in 2008. The way we reverse it is to reverse the DL NW merger. Which I don't think is gonna happen. Sorry again.

But I just want to say that I agree with you, I said it in 2008 and am saying it now. Illegal mergers are not a great solution. But we are deep into that regime now.

[Edited 2016-01-07 08:39:31]

richierich · Thu Jan 07, 2016 4:41 pm

Quoting catiii (Reply 43):
Relax. It was very public that in exchange for getting JFK slots they had to agree to upstate New York service. Nothing nefarious or backroom about it.

Correct. It is a stretch to imply that this means Schumer is in B6's "back pocket." Are you telling me that other airlines do not work with local/state/federal governments? I'd bet money that DL has a government affairs department.

catiii · Thu Jan 07, 2016 5:18 pm

Quoting richierich (Reply 46):
I'd bet money that DL has a government affairs department.

And theirs really is shady. The woman who runs it is an elected official in Michigan...

JBo · Thu Jan 07, 2016 6:03 pm

Why is everyone on this forum so obsessed with finding the next great airline merger?

I mean...

1) From a business standpoint, it's less competition. Sure, arguments can be made for the smaller carriers teaming up to be able to better compete with the juggernauts that are AA, DL, and UA, but at the same time, it's still less competition.

2) From an enthusiast standpoint, it's less variety. How can anyone on this site be excited about that? Even I've lost some interest in the spotting hobby with fewer liveries floating about.

It seems like there's a new thread every couple weeks trying to pair up F9, NK, B6, AS, and VX with one another in various combinations. It's a tired conversation that rarely yields anything new.

tortugamon · Thu Jan 07, 2016 6:10 pm

Let me say that I like AS as a B6 target more than than VX. A well established west coast product with a large hub like B6's JFK. If only the fleets were similar. A much more valuable target.

Quoting stlgph (Reply 32):
Who's bankrupt?

None of the relevant carriers, and that is certainly at least partially due to consolidation in my opinion. Of course cheap fuel helps. I think the consolidation has helped make the industry profitable and sustainable.

Quoting STT757 (Reply 38):
There are no slots at SFO and LAX, the only slot controlled airports in the US are EWR, JFK, LGA, DCA. Anyone could add any flights to LAX or SFO

Good luck finding gate space at the appealing times. SFO especially. Those LAX/SFO gates/time slots are valuable.

Quoting frmrCapCadet (Reply 41):
Any economist with background as to how many strong players we need to avoid monopoly pricing?

Overall or any a particular route? I think the answer changes based on how you look at the question. Personally, I think 4 large airlines right now is borderline alright for consumers but I think the DOJ will not be interested in approving more mergers for those airlines any time soon. I think the best thing for the industry is if the other airlines grow, F9, B6, AS, HA, NK, and they are doing just that!

Quoting Flighty (Reply 45):
It does not satisfy equal protection to say one company can have 1,000+ aircraft in a network but for the competitor, 200 is too many. That would not fly. It would not be possible for regulators to deny these mergers.

Completely agree.

tortugamon

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