DCA Hub

[freedom]

I think the DOT will concede on this one airport, if they don't there are going to be A LOT of very powerfull, very pissed off people in DC looking for heads to roll.

 

[USFlyer]

From what I understand, there is still a distinction maineline vs. commuter, so it's a bit wrong to say that US uses their slots inefficiently. They can't just use an A320 on a slot that cannot support that size aircraft. That said, this could be a nice bargaining chip that US has. If the distinction mainline vs. commuter can be relaxed or outright removed, then it gives the combined carrier much more flexibility in how its slots can be used.

The slot swap was a different transaction than a merger with one carrier in bankruptcy, so I wouldn't necessarily assume the same logic applies in this case.

I go back to my previous question. I'm a US FF. Where is the letter / petition that I can sign?

 

[WorldTraveler]

I think the DOT will concede on this one airport, if they don't there are going to be A LOT of very powerfull, very pissed off people in DC looking for heads to roll.

it is JUST the nation's capital and really doesn't matter, right?

There really isn't an antitrust issue here. If anything, there is an antitrust issue if US is forced to pull down smaller cities as that will leave just UA in many non-stop markets from the DCA/IAD area. The issues is all "optics" and the politics of having Government employees determine winners and losers, in lieu of the marketplace.

Just curious, how many slots and gates and at what airports was DL forced to divest when it acquired NW?

With all due respect, the decision about whether the issue is an ATI issue or not is not yours and not mine to make but the DOJ’s in consultation with the DOT.
Given that there have been multiple mergers or asset transactions that have involved slot restricted airports with required divestitures, the idea that AA/US should be exempt is really laughable.
DL did not have any divestitures at LGA or DCA because it did not exceed 25% of the slots; it was the slot deal that pushed DL to just under 50%. Read that again. Even AFTER the slot deal, DL had less than 50% of the slots at LGA and it was still required to divest slots before. US has 55% of the slots at DCA; new UA was required to divest the equivalent of PMUA’s slot portfolio in order to the get the merger passed involving EWR.

Parker has to pull out all the stops in the hopes of keeping the combined US-AA slot portfolio at DCA. If he fails, and new AA has to divest slots equal to the number currently held by AA (keeping new AA at the same number of slots as US), then a lot of people will ask him why he was so hell-bent to give DL so many LGA slots. If he succeeds at keeping most or all of the AA slots at DCA, then the DCA-LGA slot swap won't look quite as moronic in retrospect.

Had the DCA-LGA slot swap not been consumated, then new AA would have the largest number of LGA slots (about half of them following the inevitable gov't mandated divistitures) and new AA would have the largest number of DCA slots (about half of them). New AA would be the biggest at LGA and DCA.

Instead, new AA will be a distant second to DL at LGA and will probably be in the same position at DCA as US currently holds (about half the slots) once Parker loses the arguments and is forced to divest a substantial number of DCA slots (roughly equal to AA's current DCA holdings).

The whole slot deal is mind-boggling given that US talked for so long about wanting to merge with AA. Not only did he set US up to have so many slots at DCA that it would be impossible to merge or even gain another slot thru a route case, but he also signed away a big chunk of US’ facilities at LGA which will make it impossible to find a common terminal for the combined AA/US.
It still doesn’t change that DL gained about 3X more LGA slots than the same number as US gained; US got the promise of a slot pair at GRU and $60M but the Brazil route case has ground to a halt, presumably because the DOT is not stupid enough to accept the argument that AA and US should be considered separately in the route case even while they are processing the merger application.
Given that eight pairs of slots went for about $40M IIRC, the cash value of the slots that US agreed to was horribly short of what the market could have born.
There seems to be little about the slot deal that US did with the forethought of the AA merger or with any sense of the value of what they were trading away.

Part of the analysis is not simply "number of slots" but also "number of seats". I know a saw a statistic somewhere that the combined AA-US would have a majority of slots but not more than 50% of the seats. Again, the majority of the existing US slots are commuter slots that can only be used on flights with fewer than 76 seats (I think that's the upper limit).

Some divestitures will surely be required -- the politics dictate that even if I disagree with it personally on other grounds. The question is how many and of what type. Of course, if the DOJ requires too many to be divested, it could always be fought in court. While I doubt the company would choose this path, it's always a possibility.

It is a GIVEN that AA/US will divest. If the DOT/DOJ don’t require divestment, they are setting up the case to say that anyone can come up w/ an argument as to why antitrust laws should not apply to them, esp. since slot divestitures have become so common in the airline industry.
If the DOJ/DOT doesn’t act, they are practically inviting DL to buy B6 since DL+B6 would have a smaller percent of JFK slots than AA/US would have at DCA.

The slot swap was a different transaction than a merger with one carrier in bankruptcy, so I wouldn't necessarily assume the same logic applies in this case.

I go back to my previous question. I'm a US FF. Where is the letter / petition that I can sign?

No, the slot swap was no different from a merger with respect to market concentration issues which is what the DOJ is focused on.
They don’t care how one carrier gains the slots but they sure do care about the total amount of slots that a carrier will end up with. For one carrier to end up with 2/3 of the slots at any airport and be able to further add to them simply won’t be allowed, no matter how many letters you or any Senators want to write.
It doesn’t change that it would be very easy for the DOT to stipulate that a certain percent of the slots that US divests must be used for service to cities that do not presently have nonstop service to DCA, including potentially a list of the cities that AA/US has gained support from legislators to retain.
But there is absolutely nothing that says that other carriers cannot serve those cities.
Further, there is nothing that says AA/US needs to serve all of the medium or large cities that it currently serves separately from DCA.
AA/US has focused on small city service as if we are all supposed to accept that their current medium/large city use of slots at DCA is not to be questioned when it very much will be under scrutiny.
If AA/US feels they need to serve a number of small cities, then they can reduce their large/medium size schedule to fit within the requirements the DOT/DOJ establish for the maximum number of slots that they can hold at DCA – which will be less than the combined total of both.
In fact, AA/US argument about the necessity of serving small cities actually helps their network competitors since WN and B6 won’t be able to serve those kinds of cities because of their airplane size.
DL and UA certainly can with their regional jets so it is very possible that continued focus on small cities only forces more and more slots out of B6 and WN’s reach and into the hands of network carriers; remember that DL served several small cities from DCA before the slot deal. DL has said they expect to benefit from the divestitures required under AA/US which will likely include the ability to serve some of the cities that AA/US serve now.

 

[Walmartgreeter]

The whole slot deal is mind-boggling given that US talked for so long about wanting to merge with AA. Not only did he set US up to have so many slots at DCA that it would be impossible to merge or even gain another slot thru a route case, but he also signed away a big chunk of US’ facilities at LGA which will make it impossible to find a common terminal for the combined AA/US.

Hey WT, hope you and yours are doing well.

We here in the trenches knew the AMR deal was being being set up for years, including the closing of 4 of our crew bases and the Delta LGA/DCA swap.

Maybe it won't all work out, but I refuse to believe a man that could somehow get the reins of the largest airline in the world has not thought a little of this all out.

Best,

Greeter (embarrassed to be defending Parker on anything)

 

[robbedagain]

the san dca i believe is only a weekend only non stop as for phx i thought there is just 1 or 2 nonstops a day? also it was interesting to note that on www.justplanenews.com an article said something that meger may have to give up some slots at clt? i thought clt is not a slot controlled airport like dca and lga

 

[WorldTraveler]

Hey WT, hope you and yours are doing well.

We here in the trenches knew the AMR deal was being being set up for years, including the closing of 4 of our crew bases and the Delta LGA/DCA swap.

Maybe it won't all work out, but I refuse to believe a man that could somehow get the reins of the largest airline in the world has not thought a little of this all out.

Best,

Greeter (embarrassed to be defending Parker on anything)

yes, I know it was known.... that's why the fact that so many pieces of the slot deal seem to have left AA/US at a severe disadvantage are beyond belief.

Maybe AA/US will come out ok but it is a severe stretch to think that they won't have to divest slots; it's actually rather silly to put so much effort into a campaign that seems almost certain for the company to lose. Maybe it is Parker's efforts to vindicate himself in the DL-US slot deal and maybe things changed so much between the deal was signed with DL and when it closed that DL really gained the upper hand, but I have a feeling that US was outfoxed and they didn't realize what was being done to them.

If DL ends up with a chunk of the slots at DCA they end up swapping back to US, it will be very hard for Parker to argue he wasn't hoodwinked.

yes, we are doing well. Had a REALLY good day today on MULTIPLE levels. Glad you asked.

 

[FWAAA]

the san dca i believe is only a weekend only non stop as for phx i thought there is just 1 or 2 nonstops a day? also it was interesting to note that on www.justplanenews.com an article said something that meger may have to give up some slots at clt? i thought clt is not a slot controlled airport like dca and lga

DCA-SAN is the daily beyond-perimeter flight that US won last year, same time that AA won LAX and VX won SFO.

PHX has three daily DCA-PHX flights. LAS still has one daily round trip to DCA.

CLT is not slot controlled, but it's not beyond possibility that the government might require some gate/real estate divestitures at CLT. Why not link to the erroneous article so that we can critique it? Holly has hundreds of articles linked on her site and I don't feel like searching for it.

 

[Walmartgreeter]

yes, I know it was known.... that's why the fact that so many pieces of the slot deal seem to have left AA/US at a severe disadvantage are beyond belief.

Maybe AA/US will come out ok but it is a severe stretch to think that they won't have to divest slots; it's actually rather silly to put so much effort into a campaign that seems almost certain for the company to lose. Maybe it is Parker's efforts to vindicate himself in the DL-US slot deal and maybe things changed so much between the deal was signed with DL and when it closed that DL really gained the upper hand, but I have a feeling that US was outfoxed and they didn't realize what was being done to them.

If DL ends up with a chunk of the slots at DCA they end up swapping back to US, it will be very hard for Parker to argue he wasn't hoodwinked.

yes, we are doing well. Had a REALLY good day today on MULTIPLE levels. Glad you asked.

If I was not sharing a lifeboat with Parker, I would hope for your suggested outcome!

The man has personally lied to me privately and now again in public. Yet my fortunes are tied to his success.

Truth be known, I wish my sister had not been working for Delta in the early 80s. Sure would have solved my commuting problems, living in Atlanta! (With the big assumption Delta would have even hired me!)

Greeter (and good for you and your family, I am reasonably aware of the changes you have made in your life to accommodate their best interests)

 

[WorldTraveler]

You're very kind, Greeter, but making tough choices for the betterment of the people we are charged to care for is what life is all about, isn't it?

I very much wish you had been able to work for DL.

I have nothing against Parker or US, esp. WRT the slot deal or DCA.
However, the US government has been very clear about increasing competition at slot controlled airports and not allowing consolidation among the large network carriers to occur, esp. in the front door of the nation's capital. US ended up wtih a higher percentage of slots at DCA than DL did at LGA after the slot deal. The final product of the slot deal was problematic for US even before the merger was announced.

AA/US might succeed in not having to divest slots but the odds of that happening are very, very low.

More importantly, building the business plan around the expectation that AA/US could control 2/3 of the DCA slots is risky at best and someone should have certainly pushed back if that was the case.

If that isn't the case, then AA/US will be fine w/ a smaller slot portfolio and if some of the cities that AA/US serve from DCA are served by other carriers and if AA/US is forced to live with ONLY 55% of DCA's slots... they can do it and they will succeed regardless.

I do wish you and yours well, my friend.

 

[robbedagain]

fwaa.. i found it on an article in www.justplanenews.com under the Lobbying in American-USAirways merger focuses on the smaller cities... and it appears to come from reuters on yahoo.com

on justplanenews.com scroll down and go to page 2

 

[FWAAA]

Ok, here it is:

http://news.yahoo.com/lobbying-american-us-airways-deal-focuses-small-cities-012020286.html

The only mention of CLT and DFW are the following:

Antitrust experts have said the Justice Department, which must approve the merger, could ask for divestitures in US Airways' hubs at Reagan National and Charlotte, North Carolina, and American's hub in the Dallas-Fort Worth airport. Outside these areas, the carriers fly different routes for the most part.

Anything is possible - perhaps the government will demand some gates at CLT. DFW has plenty of space, so I don't see any divestitures there. DL wasn't forced to give up any real estate at ATL when it merged with NW, so I don't see any required divestitures at DFW.

 

[WorldTraveler]

CLT is not slot controlled, but it's not beyond possibility that the government might require some gate/real estate divestitures at CLT. Why not link to the erroneous article so that we can critique it? Holly has hundreds of articles linked on her site and I don't feel like searching for it.

The likely requirement will be that AA/US divest gates in its hubs such as CLT and DFW... US controls a very high percentage of gates at CLT but the DOT will likely require that AA/US vacate the gates currently used by AA to allow additional competitors... perhaps that will be enough to allow increased competition... maybe not.
At DFW, it's not likely that AA would want US' gates anyway but there are indeed plenty of gates.
ORD and PHL are also not likely to be a problem.... but in many cases, both carriers operate some of the same nonstops the other does so there will a natural consolidation of facilities because the number of gates needed will not be additive. It is precisely the fact that AA and US both operate CLT-DFW while no one else does that the DOJ wants to make sure other carriers can expand in both cities if needed to help keep competition viable.
Hard to know what other airports would be issues but the issue is likely freeing up open gates. The issue of divestiture depends on how many gates each airport has available for new competitors.
NW operated on Concourse D and DL did not take over those gates after the merger... not sure of how the gates were reshuffled, though. Right now, ATL has plenty of open gates esp. on Concourse D because of the opening of the F concourse and now WN's decision to reduce the size of its hub in ATL.

The bigger issue including at LGA and LAX is that AA and US are in separate locations of the airport with few easy alternatives to consolidate all of their operations in one location....

 

[USFlyer]

With respect to CLT, last I checked there are already some open gates for competitors to use, so having to divest more than might just go unused seems a bit ridiculous. I would think, if this is required, there would be some sort of "use it or lose it" provision if other airlines don't step up to lease those gates. That said, I suspect US could easily absorb the existing AA flights into its current gate portfolio at CLT, given the duplication of flights to ORD, DFW, etc. would likely be reduced anyway.

 

[USFlyer]

With all due respect, the decision about whether the issue is an ATI issue or not is not yours and not mine to make but the DOJ’s in consultation with the DOT.

I'm aware of that. Like you, I'm offering an opinion on a public bulletin board. I have no financial stake in how this shakes out. I'm simply a US FF from DCA who would prefer to have more non-stop service on my preferred carrier and a viable DC competitor to UA at IAD.

With respect to the DL-US slot swap, in hindsight the deal doesn't look so good. However, when that deal was first signed, there was no guarantee that US would eventually get AA to merge. There were many howling back when Wolf tried to merge with UA and then stopped actively managing US. When the deal fell apart, US was left with no credible business plan. The slot swap made sense for the independent US and still might depending how the framework of the DOJ analysis shakes out.

Also, with respect to the comment that Parker hasn't thought through how to handle divestitures, I really don't believe that to be the case. He knows some slots will need to be divested. However, he should do everything he can, which includes eliciting political support, to keep as many slots as he can. To just roll over and wait isn't a good strategy.

 

[robbedagain]

I'm aware of that. Like you, I'm offering an opinion on a public bulletin board. I have no financial stake in how this shakes out. I'm simply a US FF from DCA who would prefer to have more non-stop service on my preferred carrier and a viable DC competitor to UA at IAD.

With respect to the DL-US slot swap, in hindsight the deal doesn't look so good. However, when that deal was first signed, there was no guarantee that US would eventually get AA to merge. There were many howling back when Wolf tried to merge with UA and then stopped actively managing US. When the deal fell apart, US was left with no credible business plan. The slot swap made sense for the independent US and still might depending how the framework of the DOJ analysis shakes out.

Also, with respect to the comment that Parker hasn't thought through how to handle divestitures, I really don't believe that to be the case. He knows some slots will need to be divested. However, he should do everything he can, which includes eliciting political support, to keep as many slots as he can. To just roll over and wait isn't a good strategy.

I think he is doing all he can to garner support to keep all the slots but i do think he also has slots he knows he may have to give up some but i wonder if he knows which ones he would have to give up