American Airlines and US Airways reportedly seek merger extension

[Thomas Paine]

Sounds like you envision DAL being to Dallas what LGA is to NYC or what Midway is to ORD. I could see expansion but do you really see that much of a shift with Business travelers with an all coach seating configuration? I don't. Like you said they aren't paying for the seats so why cram yourself in coach and lose out on the Miles you can use for a family vacation?

 

[FWAAA]

WN currently flies about 250 peak weekday departures from MDW where WN occupies 32 gates, twice as many as WN will have at DAL.

No doubt WN will expand at DAL and some of the small towns within the Wright Amendment perimeter will be cancelled to free up gates to serve large cities outside the perimeter. But how many business travelers will switch to WN? There is another huge Texas city just 250 miles away that may be instructive in predicting the answer. Houston features a close-in airport (HOU) just seven miles from downtown and it features a huge international airport that was designed to replace it more than 20 miles from downtown (IAH).

In Houston, WN flies 156 peak weekday departures from 19 gates and Houston Hobby has never been subject to any destination limits like DAL. So does WN have a huge share of the local traffic between Houston and west coast cities? Nope. How about East Coast cities? Nope. In fact, UA has the largest share to many of these cities and, generally, at much higher fares than WN. It's one thing for business people to sit in tight Evolve seating for an hour between DAL and HOU or AUS or SAT; it's quite another for them to sign on for a flight to BOS, SEA, SFO or LAX where they will be crammed in for three-plus hours. High frequencies and short intra-Texas flights are what attract business travelers to DAL and keep them from driving out to DFW. Are they really going to put up with the WN-experience for much longer domestic flights? Maybe WT and swamt are right.

Business travelers won't book airlines that don't offer sufficient frequencies, especially if they're elite frequent fliers with a competitor that does offer high frequencies.

I don't know the extent of the damage that WN will inflict upon AA at DAL, but I'm skeptical that WN will ever fly 250 daily departures from just 16 gates and I'm skeptical that WN will have any larger a share of the metroplex business travel than WN has in Houston.

WT and swamt have staked out the "WN will severely damage AA in the metroplex beginning October, 2014" position, but I'm not convinced.

 

[WorldTraveler]

In fact, FWAAA, WN has 32% of the US domestic market from the combined IAH/HOU market compared to 45% for UA... considering that WN has far fewer flights than UA, that is a pretty hefty size operation. It should be obvious in HOU/IAH and city after city that WN carries far more local passengers per flight than do the network carriers; AA carries on average about 60 local passengers/flight from DFW to its top destinations.

And keep in mind again that the geography of DAL relative to DFW is totally different - and much more of a threat - than in any other WN primary airport compared to other multi-airport cities where a network carrier and WN have large operations at different airports in the same city.

The whole reason Dallas and Ft. Worth wanted Love Field closed when DFW opened was because of the favorable geography DAL has to the largest areas of the Metroplex. Remember, you have to DRIVE BY Love Field to get to DFW (unless you take a Samaria-style detour) and DFW and DAL are only about 15 minutes from each other by car - far closer than any other two airports with multi-carrier hubs.

It isn't a fluke that WN has managed to achieve equal amounts of market share to AA at comparable fares in markets where the two can compete outside of the perimeter.

And let's not forget that WN has had a cost advantage relative to the network carriers for years and still has a large cost advantage to AA that still exists even as AA comes close to leaving BK.

There also is a proven effect that a low fare carrier hub has on generating traffic for other carriers... it is very likely that other carriers will add destinations even from DFW since AA will have to reduce their fares to WN levels, making it easier for other carriers to increase their presence at DFW.

The fall of Wright will be one of the most significant events in the US airline industry this decade and it will have enormous implications both for N. Texas and to AA. WN has been preparing for it for years and has their war chests full and ready to use to become at least on par with AA in the N. Texas domestic market, regardless of whether they add international flights at DFW or not.

I also think that WN would probably have no trouble finding support for being able to add flights at DFW without giving up gates at DAL. The whole Wright Amendment was uncompetitive from the beginning and the AA/US merger will only provide fuel to argue that even the termination agreement has uncompetitive elements to it.

 

[Hatu]

With that trial bumping up against the original deadline, the two on Friday set these new deadlines for when the merger could be terminated by either party – the later of :

– Jan. 18, 2014.
– Fifteen days after there’s an order in the U.S. District Court of Washington, D.C., deciding the case in favor of the airlines.
– Five days after the court “enters a final, but appealable, order permanently restraining, enjoining or otherwise prohibiting consummation of the merger following the Trial.”


http://aviationblog.dallasnews.com/2013/09/american-airlines-us-airways-extend-deadline-to-complete-merger.html/

 

[ContUNITEus]

Wow.... looks like they're dead serious about this merger.... LOL

jk

 

[robbedagain]

gonna be interesting w tom horton not getting the 20 mill wonder how the doj n the 2 carriers will settle if they settle or how the trial will turn out... may be like a circus

 

[jimntx]

gonna be interesting w tom horton not getting the 20 mill wonder how the doj n the 2 carriers will settle if they settle or how the trial will turn out... may be like a circus

I'm too tired (and don't care enough) to look up and read the umpty-leven links to the Horton/$20 million issue. Is it final that he will not get the money? I know the BK judge ruled against the payment, but IIRC that judge specifically said there was no barrier to AA (new or old) making the payment after we emerge from BK. I've seen a couple of posts that suggested that Horton voluntarily gave up the payment. Find that one a touch hard to believe. Wonderful if true, but hard to believe.

 

[robbedagain]

i believe so that it is final that the judge did rule tom cannot get the 20 mill severance however the board of directors at the combined carrier can do that at a later time when the carrier is not in ch 11

 

[jimntx]

and DFW and DAL are only about 15 minutes from each other by car - far closer than any other two airports with multi-carrier hubs.

WT, you must have made that trip sometime between midnight and 5am. Dallas (for that matter, the whole DFW Metroplex) has the worst, most inadequate freeway system of any major U.S. city I've ever driven in. For instance, I know of no other intersection of two Interstate freeways on the edge of a downtown business district where you have to exit down to the city streets to go from one to the other--which is what is required to get from I-35 northbound to I-30 westbound, or to get from I-30 eastbound to I-35 southbound.

Back in 1997 (or so I am told...I was still living in Houston then), the good citizens of Dallas voted a bond issue to fund a reliever freeway to run north-south parallel to I-35 from downtown Dallas to (I think) I-635 on the north side of the city. To date, not one spade of dirt has been turned to build that reliever freeway, and evening rush hour in both directions in this section of I-35 starts about 4pm and lasts until after 7pm some days. And, that is excluding delays due to wrecks or other non-vehicle obstructions--such as freeway repair crews. And, of course due to the delay the cost building said freeway today has increased exponentially over what it would have cost in 1997.

P.S. I agree that those who downplay the effect that the fall of the WA will have, are just like the little boy whistling in the dark. As swamt stated, if AMR wasn't concerned about the possible effects, why have they spent millions of dollars prior to this fighting every single expansion of the WA boundaries? I was based in STL at the time that AMR decided that they no longer needed to provide much non-stop service from STL to the rest of the United States--that our customers didn't mind in the least having to change planes in DFW or ORD to get anywhere. Within a short period of time, you couldn't stir the guys/gals in suits carrying computer bags in East terminal with a baseball bat--all of them paying the extra $25 to board first and have prime seat selection.

As friends of mine at STL who used to work for Eastern, Pan Am and Braniff say all the time..."I've sung this song before. I've danced this dance before. And, every time management ignored all the warning signs and operated as if we were too big to fail."

 

[swamt]

Read an interesting article this morning. I won't post the entire article but below I provided a blurp. What is interesting is the fact that the DOJ is now saying they are willing to compromise. Maybe I'm a little behind here but that is the first time I have read that the DOJ is willing to come to an agreement, always heard prior only from the airlines not the DOJ. There is also another link within this blurp that takes you to the entire story. I still am holding onto my original prediction that there will be a merger, but it will come with some rather large concessions tied to it. Here's the quote from the article;

"Despite the arguments, American Airlines, US Airways, and the DoJ have said they’d be willing to work out an agreement that would allow the deal to go through."

 

[swamt]

WT, you must have made that trip sometime between midnight and 5am. Dallas (for that matter, the whole DFW Metroplex) has the worst, most inadequate freeway system of any major U.S. city I've ever driven in. For instance, I know of no other intersection of two Interstate freeways on the edge of a downtown business district where you have to exit down to the city streets to go from one to the other--which is what is required to get from I-35 northbound to I-30 westbound, or to get from I-30 eastbound to I-35 southbound.

Back in 1997 (or so I am told...I was still living in Houston then), the good citizens of Dallas voted a bond issue to fund a reliever freeway to run north-south parallel to I-35 from downtown Dallas to (I think) I-635 on the north side of the city. To date, not one spade of dirt has been turned to build that reliever freeway, and evening rush hour in both directions in this section of I-35 starts about 4pm and lasts until after 7pm some days. And, that is excluding delays due to wrecks or other non-vehicle obstructions--such as freeway repair crews.

P.S. I agree that those who downplay the effect that the fall of the WA will have, are just like the little boy whistling in the dark. As swamt stated, if AMR wasn't concerned about the possible effects, why have they spent millions of dollars prior to this fighting every single expansion of the WA boundaries? I was based in STL at the time that AMR decided that they no longer needed to provide much non-stop service from STL to the rest of the United States--that our customers didn't mind in the least having to change planes in DFW or ORD to get anywhere. Within a short period of time, you couldn't stir the guys/gals in suits carrying computer bags in East terminal with a baseball bat--all of them paying the extra $25 to board first and have prime seat selection.

As friends of mine at STL who used to work for Eastern, Pan Am and Braniff say all the time..."I've sung this song before. I've danced this dance before. And, every time management ignored all the warning signs and operated as if we were too big to fail."

Some people just don't know the DFW area that post from far away. I punched into google maps from DAL to DFW airports. Now mind you, these are from entrance to entrance. If your a customer traveling between each you have to drive much deeper into the airports. The mileage is from 19-22+. Add in internal airport drives and you can add 2-3 miles and sometimes more at just DFW depending on terminal and gates. So when someone posted 15 miles it is more like 20-30 miles (again depending on which entrance you are using and which gate) and if anyone thinks they can drive it in less than 30-45 minutes is nuts. From gate to gate at each airport (with no traffic, and doing the speed limits) with regular every day traffic, cannot do it under 30 mins, would be hard pressed to do it in 45 mins. It's just the nature of the beast around here with traffic.

 

[WorldTraveler]

I have driven DFW to DAL and, yes, I would agree that 15 minutes is a stretch but the point is that DFW to DAL are still closer together than any other two airports at which WN is large and a legacy carrier has a hub at another airport. Even comparing IAH/HOU, the difference between the size of the WN and UA market is a whole lot smaller than a lot of people think and the same thing is true of MDW vs ORD; both Chicago and Houston have similar economic and geographic parallels.

It also doesn't mean that you can get from downtown Dallas to either airport in 30 minutes but it is true that you have to go out of your way to not get to DAL before you get to DFW.

If someone can even get from gate to gate between any two airports in less than an hour, that is a pretty remarkable accomplishment.

What is absolutely true is that WN is desperately waiting for the opportunity to expand nationwide from DAL and they have never disappointed or faltered on a major strategic initiative while a whole lot of network carriers have significantly underestimated what WN is capable of doing.

Terry Maxon is about ready to get really busy keeping up with the N. Texas aviation scene.

 

[dfw gen]

Did you turn in your delta pom poms for southwest pom poms?

 

[WorldTraveler]

what do pom poms have to do with anything?

The issue is N. Texas aviation which principally features AA and WN.

 

[FWAAA]

Read an interesting article this morning. I won't post the entire article but below I provided a blurp. What is interesting is the fact that the DOJ is now saying they are willing to compromise. Maybe I'm a little behind here but that is the first time I have read that the DOJ is willing to come to an agreement, always heard prior only from the airlines not the DOJ.

No, that's not the first time that the government has mentioned settlement. Bill Baer of the Antitrust Division mentioned settlement on the day that the DoJ filed the complaint. The federal rules of civil procedure require that parties in federal court keep the court apprised of settlement progress, and thus the government and the airlines have mentioned settlement in more than one filing with the court since the lawsuit was filed.

Chip (you'll find him tilting at similar windmills every day in the US forum) similarly hangs on every mention of the word "settlement" to predict ever-higher probabilities that US-AA and the DoJ will come to agreement any day now and that the merger will happen. Like most pilots at US, it's the only reasonable option left for them to see raises, as they currently fly A320s and E190s for lower hourly wages than at jetBlue.

There is also another link within this blurp that takes you to the entire story. I still am holding onto my original prediction that there will be a merger, but it will come with some rather large concessions tied to it. Here's the quote from the article;

"Despite the arguments, American Airlines, US Airways, and the DoJ have said they’d be willing to work out an agreement that would allow the deal to go through."

Maybe we'll see a settlement and the merger will happen, but the mention of "settlement" by the parties isn't a sign of any progress on that front.

It's similar to the boilerplate warning language that airlines have had to put in their 10-Ks over the past decade. In 2004, 2005, 2006, etc, AMR's 10-Ks contained a warning that it was possible that AMR might have to file Ch 11. Many people on this forum instantly latched onto that language and predicted that the odds were very high that AMR would file a Ch 11 petition within weeks or months of those 10-Ks. Eventually, in November 2011, AMR filed and caught many by surprise.

As WT has posted, antitrust lawyers tend to see why the DoJ has finally awakened and challenged an airliine merger. Many employees of US and AA, on the other hand, along with all the Wall St financial analyst whores complain that the government knows nothing about the airline industry and is completely off its rocker. Obviously, the employees and the Wall St financial analyst whores are a little less versed on the antitrust laws than are the antitrust lawyers.