Delta creditors hard for US Air to corral-adviser

[phasersonstun2]

Didn't I read somewhere that Spirit Airline was offering .5 cent faires (One way)????

I wouldn't give a nickel to ride on them... they should pay me.

 

[Elevation]

And what will fly the 3 routes that were previously flown by those 3 150-seat planes? Are you going to fly them with only the 2 planes that "appeared out of thin air?"

All you're mostly doing is shuffling planes around, although there could be some advantage gained at the smaller end of the airplane size spectrum - the planes you say will be parked and thus not "extras" to be used.

Still, this is all about your "economies of scale". Notice that first word - economies. That means that getting bigger allows you to produce X% more product while costs increase less than X%. Doesn't say anything about the revenue side of the equation.

As in your example, you're still carrying the same 420 people. At a lower cost to be sure, but where's the extra revenue unless the average fare increases?

So I'll ask the same question again - where does the $900 million/year in additional revenue come from if not higher average fares?

Jim

the Revenue comes from not increasing fares but not discounting fares to fill that market that you now have better control over.


there will be an order for A/C with this deal if it goes though, just like the AWA/US deal.

 

[BoeingBoy]

Read carefully - average fares will increase. Those folks that got that discounted fare will either pay more or not fly. Either way, the total of the fares paid by all the passengers on that plane, divided by the number of passengers, is higher.

"there will be an order for A/C with this deal if it goes though, just like the AWA/US deal."

You mean the 7 A321's added to an existing order for a couple of hundred planes? That are to be replacements for planes going back to the leasors?

Jim

 

[Elevation]

Read carefully - average fares will increase. Those folks that got that discounted fare will either pay more or not fly. Either way, the total of the fares paid by all the passengers on that plane, divided by the number of passengers, is higher.

"there will be an order for A/C with this deal if it goes though, just like the AWA/US deal."

You mean the 7 A321's added to an existing order for a couple of hundred planes? That are to be replacements for planes going back to the leasors?

Jim

1. A321 are adding more seats

2. 757's oh yea forgot about those did you

3 A350's forgot about those too.

4. It's called yield mgmt. Something Kirby is one of the best at.

5. Reduce the crazy walk up fares/First Class ripoffs of the DAL routes and average it then. The press release will say "Average fares Redued by___%"

 

[Itestwell]

Then where will the extra $900 million/year (my mistake saying $950 million before) in revenue from combining overlapping route's come from? There are absolutely cost synergies from combining companies, but we're talking additional revenue here.
I guess you haven't actually looked at the fare reduction announcements or attempted to determine how many passengers were affected. Announcing that fares have been reduced in "1000 markets" sounds impressive until you look at how many markets we serve - over 26,000. The much heralded reductions also had significant black-out periods. Finally, the reductions were in markets that had relatively few passengers. The result was that only a very, very small fraction of passengers realized the fare reductions.

Meanwhile, there have been something like 10-12 general fare increases over the last 15 - 18 months. Increases that affected a much larger share of our passengers.

There's nothing wrong with just regurgitating the company PR spin without even attempting to analyse it. But if you're going to argue that the company's PR spin is "the truth, the whole truth, and nothing but the truth", at least try to back it up with some facts.

Jim

Fact is, we lowered fares in many markets, and so what if average fares are increasing? That's a bad thing? My whole argument is that the people flying out of FAY have been gouged for years, and that will probably continue if US/DL merge. Most people will drive for lower fares, just like PIT people did for years before WN.

Never said PR from the company was the whole truth, but they must be telling SOME truth regarding lowering fares and synergies, no? Come on....

Won't some of the 900 million in synergies come from DL+US= DL? Instead of two in the market, you now have one to collect the revenue! Makes sense to me!

 

[Elevation]

26 Billion in revenue with an increase of 900 million is what percent? 3.5% Wow. Earth shattering.

 

[BoeingBoy]

1. A321 are adding more seats

Depends on what they replace - perhaps you already know??

2. 757's oh yea forgot about those did you

That's funny, I didn't know that they were part of "an order for aircraft after" the HP/US merger.

3 A350's forgot about those too.

Frankly, yes I did. Of course, even if I'd remembered them I'm not sure airplanes that might arrive in 6 or 7 years add much capacity now.

4. It's called yield mgmt. Something Kirby is one of the best at.

Actually, I admired what HP did with fare rationalization. Whoever that was must have left, though - it seems to have stopped with the merger.

5. Reduce the crazy walk up fares/First Class ripoffs of the DAL routes and average it then. The press release will say "Average fares Redued by___%"

Yep, the carrier that rationalized fares (remember Simplifares) is obviously gouging the public while the carrier that hasn't rationalized fares is so benevolent. Is that Kirby's work? But I'm sure the press release will herald lower fares.

Once again, if US will be lowering those obscene DL fares while cutting capacity, where does the $900 million/year in extra revenue come from?

Won't some of the 900 million in synergies come from DL+US= DL? Instead of two in the market, you now have one to collect the revenue! Makes sense to me!

Since revenue synergy means the combined company would collect more revenue that both individual companies collected, the formula would look like this: DLUS revenue = DL revenue + US revenue + $900 million/year. So where is that extra $900 million over and above what DL & US would have collected anyway coming from?

High(er) fares are undoubtedly good for the carrier charging them, just like not paying all our taxes would be good for you or I. The DOJ's job, however, is to insure competition just like the IRS' job is to collect taxes. What's good for the carrier or taxpayer doesn't matter.

Jim

 

[Elevation]

"Another $935 million would be realized through network
rationalization synergies. Network rationalization savings would be
generated by managing the combined networks to ensure that the
combined fleet size is better matched to passenger demand.
Network synergies would also arise from better serving our current
customers, and by increasing our competitive presence, attracting
new customers and corporate accounts in markets where neither
carrier today is a significant competitor. "

Better Serving our customers=make them pay for crap they want $

increasing our competitive presence=dominant markets $

attracting new customers=stealing pax from other airlines in there backyards $

corporate accounts=citibank and merril lynch have already signed up $


=$900B (or 3.5% increase)



It's all right there on what there plan is, it's not that hard to understand, believe maybe, thats up to you. If you want a breakdown of everything you might have to go to a shareholders meeting and ask.

 

[PA18]

Which Shuttle gets sold off?

That one's easy!

The Delta Shuttle.

Why?

Because it offers superior service.

The US Shuttle has become a cattle car, with no amenities, like the rest of the airline -- as well as a connecting vehicle for the $79 fares to Walley World.

 

[PA18]

But will they serve FAY, AVL, TRI, AGS, ILM, CRW, etc?

Jim,

That is exactly the point that the politicians and other assorted "experts" overlook, regarding the issue of small markets losing service or facing higher fares.

Is there any law or regulation preventing any of the industry "darlings", like Southwest, JetBlue, and Airtran, from flying into the above-mentioned cities?

And do those airlines most likely have a viable business reason for not flying into those cities?

Bottom line: if Hooterville wants air service, then Hooterville is going to have to realize that it has to make business sense for the airline(s) serving it to do so -- be that through subsidies, or higher fares than people happen to pay in Chicago.

 

[BoeingBoy]

PA10,

I have no idea what the DOJ will actually do if this merger proceeds. I only know how they say they examine potential mergers, especially when it comes to markets that would be largely/completely controlled by the merged carrier.

As you know, there is no law or regulation that prevents any airline from serving any domestic airport/city except for two airports - DCA & LGA. But the DOJ says they look at how likely it is that another carrier will serve markets that become non-competitive if a merger is approved.

So the question seems to be not whether WN (or B6, FL, even AA, NW, UA, etc) could start service to these smaller cities if they wanted to, but whether any other carrier would start competitive service.

Note also that the DOJ defines a market as a city-pair or airport-pair, not a city or airport. So using ILM as an example, the DOJ says they would have to look at all the ILM-XXX pairings and decide how likely it is that one or more competitors would provide competing service in all/most of those pairings.

Jim

 

[pit_needs_help]

Although this industry will really never be de-regulated for the exact areas you speak of politicians and such will always have their hands involved. But no one is ever going to come in and start flying ILM-ORD. The reason Southwest and so on wont is because they are not idiots looking for markets to lose money. If the Justice Dept bases their opinions on similar markets why bother?