WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
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- #166
what are your questions related to the topic, Kev?
Forgive me and the rest of us if they have been lost in the trash.
We don't care about the rest.
If you are asking about "extractions" the contract has termination penalties. AS said that much in their earnings conference call which I pointed you to quite some time ago. Did you read the transcript?
If AS could get out of the contract, they undoubtedly would have.
The reason why "AS is being bossed around by a bigger carrier" as you put it is because there is a contract that requires each carrier to provide a minimum amount of connections on each side.
Per AS, the contract is a long-term contract with minimum performance clauses.
DL didn't sign a contract with AS in order to beef up its presence on the entire west coast even though that is also part of the agreement. DL was specifically interested in AS' feed at SEA. And whether DL wanted to do it originally, DL decided it can provide its own feed for a whole lot less than AS' $5B market value or the apparently minimal availability that AS is giving DL unless DL is willing to pay AS' much higher fare levels.
DL will have its feed at SEA whether AS provides it or not. Since DL has made the decision to add the largest domestic feeder flights on its own, then AS now has a competitor but they also have a contract they have to honor which either requires them to deliver the connections DL needs to the smaller cities on AS' network or pay a penalty. It is very possible that DL's new flights will move more and more connections onto DL or DCI coded flights and cause AS to no longer meet the minimum number of connections they have to deliver to DL, and then DL is able to force them to pay the termination fee.
Help me understand how AS wins in this or any other scenario.
Forgive me and the rest of us if they have been lost in the trash.
We don't care about the rest.
If you are asking about "extractions" the contract has termination penalties. AS said that much in their earnings conference call which I pointed you to quite some time ago. Did you read the transcript?
If AS could get out of the contract, they undoubtedly would have.
The reason why "AS is being bossed around by a bigger carrier" as you put it is because there is a contract that requires each carrier to provide a minimum amount of connections on each side.
Per AS, the contract is a long-term contract with minimum performance clauses.
DL didn't sign a contract with AS in order to beef up its presence on the entire west coast even though that is also part of the agreement. DL was specifically interested in AS' feed at SEA. And whether DL wanted to do it originally, DL decided it can provide its own feed for a whole lot less than AS' $5B market value or the apparently minimal availability that AS is giving DL unless DL is willing to pay AS' much higher fare levels.
DL will have its feed at SEA whether AS provides it or not. Since DL has made the decision to add the largest domestic feeder flights on its own, then AS now has a competitor but they also have a contract they have to honor which either requires them to deliver the connections DL needs to the smaller cities on AS' network or pay a penalty. It is very possible that DL's new flights will move more and more connections onto DL or DCI coded flights and cause AS to no longer meet the minimum number of connections they have to deliver to DL, and then DL is able to force them to pay the termination fee.
Help me understand how AS wins in this or any other scenario.