robbedagain
Veteran
- Oct 13, 2003
- 11,125
- 2,676
wings would you say city pairs such as say... ATL- DFW ORD CLT PHL etc
ORD-DFW CLT PHL MIA etc ?
ORD-DFW CLT PHL MIA etc ?
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WT, I agree with you 99% here. However, I don't think the W/A will completely take care of the DFW market. It will over time, but it will take some time if you look only at the W/A and SWA expansion at DAL. I too agree with your assumption about the DCA slots, and other city's concessions, as I think DFW will be part of it. Yes the W/A will indeed have a rather large effect on AA's market share around the DFW area, but SWA cannot get enough aircraft fast enough. They are currently looking for any used as well as new aircraft to grow quickly, but are having a hard time finding any. Your also correct about the influence of SWA to the merger and cities that are impacted. But the airlines want to include SWA and AT as they had no concessions asked of them what-so-ever, and both airlines were healthy (making profits) at time they chose to merge. The DOJ doesn't want them included because they let SWA and AT do whatever they wanted since they were 2 low cost airlines merging and would directly affect the previous mergers allowed as far as competition, fares and monopoly's were concern. They (DOJ) thought the SWA/AT merger would help offset the other major carriers mergers. I also say that SWA, B6 and other LCC's will benefit from the merger after the concessions are all done. I still think there will be a merger, but, and, and the concessions will be larger than the previous merger concessions. The DAL/DFW market after W/A goes away will expand, and the advertising for this to educate the general public will have to be treated as a new city...Wings,
gotcha...
I have posted the amount of low fare competition for each of AA/US hubs vs. other carrier hubs and AA/US is much more concentrated than DL or UA.
I don't have the info readily available but it is on here someplace....
but
DCA has about 12% low fare carriers - but 3-4% of that is for B6 just on DCA-BOS - which has no impact on the rest of the US. WN/FL have about 5% and they do fly to places that have a nationwide effect on prices.
CLT and MIA both have very little low fare competition; for CLT, there are limited gates, for MIA the problem is high landing fees which makes it a less than ideal market for low fare carriers.
DFW has no competing hub carrier; NK has a presence but it is relatively new and there isn't data to show they have had any real effect on breaking AA's monopoly.
In contrast.
at ATL, DL has competition from FL/WN with more than 150 flights/day including to the top markets.
At LGA/JFK/EWR, B6 is headquartered and has flights from all 3 airports. DL is larger at JFK overall by flights but B6 is larger if you look at just domestic. LFCs have about 15% share of seats at both LGA and EWR.
At ORD/MDW, there are 3 hub carriers.
At DEN, there are still 3 carriers fighting for the market.
At PHL, WN still has a decent sized presence.
At IAD and SFO, there is plenty of low fare competition.
At DTW, SLC, and MSP, LFCs have about 15% of domestic seats.
CVG and MEM were DL's most concentrated hubs and they have pulled capacity down there. UA's network has had plenty of competition for a number of years.
PHX has plenty of competition overall but US still is the only carrier to a number of small markets.
DFW, CLT, and MIA all have limited competition and because hubs represent regional market strength, there are a number of cities around those hubs and that are served by those hubs in which AA and US are strong and the merger will only make the combined carrier stronger.
Lot of AA/US people don't seem to want to admit that AA/US aren't the same as DL and UA but there is solid evidence to show that to be true.
In reality, AA and US have more hubs with less competition than DL or UA and it is precisely for that reason that they have so many markets where market strength will be concentrated by the merger.
If you look at the list of markets that are of concern to the DOJ, there are many combinations of the same cities in the southwest, west, and southeast where AA and US are strong and combined they are stronger - and where DL and UA are not.
There is real logic behind why the DOJ came up with the list of markets they chose...
It is also possible that the remedy is not that difficult if you ensure that AA/US do not lead fare increases in those 20 cities or so beyond opening up CLT to more competition (gate divestitures) plus slot divestitures at DCA.
The end of the Wright Amendment will take care of DFW.
MIA is harder but FLL isn't that far away... in the markets where AA and US increase their strength, the DOJ could probably still accept temporary limits on AA/US' ability to change prices.
The case can be resolved w/o having to give away the farm.
The reason why WN is excluded is because they have little to no influence in the most concentrated AA/US hubs - DCA, MIA, CLT, and DFW - or the routes that are problematic to the DOJ.
Correct me if I'm wrong here, but couldn't they just have kept the 717 fleet if your comments are correct? If they are going to come up.short on expansion at DAL due to a shortage of AC, the removal of the 717 fleet is looking pretty stupid at this point.
No reason they couldn't have shifted all of the 717 flying to DAL for your so called quick expansion.
If nothing else, I would like to see their published numbers on the city pairs of both DL & UA in comparison to what they whipped up with the 1000+ of a combination of AA & US. I'm willing to bet they are all in the same ballpark.
Absolutely! The DOJ came out of left field in the eleventh hour, with this "connecting" city pairs metric. Total BS, let's see the same analysis of the Delta, United and Southwest mergers!
seajay
although AA/US people want to believe they are being treated differently, the same methodology for measuring market concentration was used with the previous mergers.
The difference is that the market REALLY IS more concentrated now... that is what happens with mergers. That is also why the DOJ specifically stated with the DL/NW merger, that they had no obligation to treat future mergers the same way which is clearly laid out in antitrust law outside of the airline industry.
IOW, just because DL, UA, and WN all had mergers, AA/US is not equally entitled to one on the same basis.
Part of the risk of merging later in an industry is precisely what AA/US are facing. This isn't the first time that concentration has been more problematic for later mergers in an industry.... there have been many mergers in the telecom and cell phone industry but DOJ said AT&T and T-Mobile was one too many - and they shot the merger down.