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What this industry needs is long term stability, and consolidation is a key factor in that direction. By no means will it solve everything, but it will reduce over capacity, and give all airlines better pricing control. I know that you have stated that the consumers will suffer, but can you honestly say that they have been paying a fair price for air transportation for the last 20 years? You know very well that our wages have been subsidizing low fares for many years, and it's time for the passengers to pony-up if they want to fly, as the Walmart fare days are coming to a close.
Your statement about airline employees subsidizing low fares is absolutely correct.... but I have to press on your statement about consolidation resulting in better pricing control. It hasn't been addressed here or in Mr. Parker's glowing assessments of how well this merger will benefit everyone.... so I am going to throw it out one more time.
1. What is going to be cut - and more importantly which side are the job cuts going to come from?
You argue that consolidation is good for the industry - but tell me where US is going to consolidate. What hubs get cut and whose employees work at that hub?
Before you answer, perhaps you should look back at the history of consolidation in the past decade and look at what has been cut and who paid.
Since Horton says AA introduced consolidation in the past decade (9/11 period to present, plus or minus), the AA- TW merger resulted in dramatic cuts to former TW's capacity which we all know.
Look at HP/US - PIT, BWI, LAS - each side "gave" but alot of capacity came out. US' current system is stable - no real threats of further cuts.
DL/NW? CVG and MEM have shrunk alot of connecting capacity and DFW before the merger- BUT much of that capacity has been moved to NYC.
CO/UA - not much cutting so far at all. They have moved capacity back and forth between IAD and EWR and between IAH and DEN but so far, not much capacity has come out.
WN/FL - reduced duplicate BWI and MKE flying; has cut some ATL "spoke" legs and added more capacity to others to/from WN "hubs" or focus cities.
UA hasn't seen any revenue bump or increased pricing control since the merger - so far they are at the bottom of the barrel.
DL has had industry leading or close to it RASM growth (pricing control) for over a year and a half. The merger is paying dividends in terms of increased pricing.
WN's RASM is increasing again as they cut capacity.
But note that EACH carrier that is saying RASM growth as a result of a merger IS generating it ON THEIR OWN through their own cuts and restructuring.
Where will US' cuts come from and whose jobs are attached to them?
You do realize that AA/US combined will have about 20K more employees than DL or UA have and all three will be about the same size? DO you think that Wall Street and Doug Parker are going to look past a headcount bloat of 25% relative to its peers?
2. AA and US BOTH had hubs in the regions where they say they need to grow - and each has closed them. AA in BNA and RDU; US in PIT. UA closed its MIA-Latin America hub years ago and is only now regaining the #2 spot in Latin America - but still w/o MIA. You argue that the combined AA/US network will fill in all those holes that both lack, but don't consider that perhaps the combined carrier strength in those regions even w/ a merger still won't be great enough to overcome those cuts. US has walked away from NYC except for hub flying. If A can't retain enough size in NYC -and their relative position continues to shrink - how is US going to help? CO/UA does nothing to help them in the SE or MIA-Latin America and they still don't have the size necessary to compete w/ DL and AA in the SE.
You would like to think that competitively AA plus US is going to be 1 plus 1 is three.... but we have yet to see evidence that it won't be 1 plus 1 is 1.75 or 1.5.
Do you really think that DL, UA, and WN plus B6 are going to calmly sit on the sidelines and let the "last major merger" proceed smoothly. Don't you think they will be focusing enormous competitive energy on AA/US including US' and AA's existing hubs.... just as Spirit is doing at DFW, DL in NYC, and WN could EASILY do in CLT or PHX... and we are still a couple years ahead of the fall of the Wright Amendment?
3. US ALREADY prices its product well below other carriers in many markets, esp. in Europe and Latin America. You need only look at DOT fare data to see that US' fares to key markets like LHR are well below its other network peers, including DL which gained access at the same time US did. US also undercuts other carriers in most non-Star markets as well as to from Rio and other Latin America countries.
Perhaps the best thing that US could do is figure out how to compete w/ its peers in the same markets earning comparable levels of revenue. It is a whole 'nother discussion about why US can't do that now - but unless you can answer that question, you are either setting yourself for a whole lot of job cuts at US or a merger that will never deliver the benefits that you preach - and a few analysts want to believe will come from this potential merger.
These are real questions that have to be answered in order to determine how a proposed merger would work - and absent answers, hype about what a merger will benefit is nothing more than hot air - no matter how many other analysts think the merger is a good idea w/o figuring out to make it work.
