Bottom line is that domestically there are no barriers for entry into any city pairing (except for slot controlled airports).
Anyone willing to lose money can start an airline today, n'est pas?
All the bluster and analysis I've read seems to ignore this fact.
The marketplace will ultimately decide who the winners and losers are.
New entrant airlines will be created if and when the current players overprice themselves in the market.
And the public will flock to the lowest priced carrier - that much has been proven time and again.
Cheers.
Problem for that theory is that the DOJ doesn’t operate US antitrust laws or practice on the basis of POTENTIAL but rather ACTUAL competition. Just because there is a market and assets (gates/slots) available that would allow a competitor to enter the market doesn’t mean allowing one company to corner the market will be allowed, regardless of the industry.
The DOJ’s case is built on the notion that there are indeed fairly high barriers to entry in the airline industry and the current level of consolidation has only compounded the ability of a handful of carriers to prevent meaningful competition. Even if a new carrier comes along, when 90% of the market is controlled by four carriers, there will be no meaningful competition.
Add in that there were emails and internal communications (that got sent to competitors) saying that the purpose of the AA/US merger was to eliminate competition, and the DOJ’s ability to seek deep concessions of block the deal altogether is a whole lot bigger than a lot of people on here want to admit.
AA and/or US will no doubt seek more concessions, and thats with or without a merger.
As long as the workers of these two carriers make taking concessions from their workers painless for the company why wouldn't they seek concessions? Sure they always come up with an excuse about how they don't want to do this, but they must for our own good, and not to worry one day will all share in the success that our sacrifices will enable, but the fact is they will continue to take from us as long as we allow them to take from us with no penalty and the day we will all eat "pie in the sky" will never come. The only thing at this point that will slow them down is the fact that mechanics are becoming scarce and as we leave, our replacements either will be hard to find or hard to retain with the absolute crap they are offering. But with no threats on the Horizon for a strike, job action or any other form of resistance to concessions by the elderly workers they still have, who aren't going anywhere except maybe the grave, you can be sure that the promises made will not be kept for one reason or another (once again what penalty have they suffered for the broken promises of the past?). Now they will blame it on the DOJ, how convenient, if that didn't happen it would have been something else. I for one will not be made a fool of by calling or writing to anyone to help this merger go through, a deal that will do nothing for us but put us through another seniority integration nightmare and subject us to a split union managed by the two worst performing unions for mechanics in the industry. people have short memories, think back to 2001, when the same Union officials were telling us how we needed to contact our elected officials and push for bail out money for the airlines, which we did, after they got their money they slashed headcount across the industry, we asked the Airlines to support extended unemployment benefits, their response "F -YOU". So here we are 12 years later once again being told to write letters so the people who screwed us out of our wages, benefits and pensions can consummate a deal that will make them all that much richer and make our lives that much worse.
The chances that AA and US will honor their previous labor commitments went down dramatically when the DOJ filed its suit to block the merger. The chances that AA/US will be allowed to merge without any concessions is extraordinarily low.
While you would like to think that AA and/or US people would say “enough is enough” and just walk off the job, the chances of that happening are also very low in part because AA and US’ financial situations will grow increasingly perilous the longer this whole thing plays and the deeper the concessions that are asked. The competitive environment in the industry is intense and AA and US are highly vulnerable; given that there is a lengthy and costly process to merge two airlines anyway, the road ahead of both is not at all easy and there are a number of factors that make it all the more difficult:
Interest rates are increasing which makes the debt both have taken on more costly. US has significant debt payments due in the next year or so.
The US dollar is strengthening relative to the currencies of a number of emerging market countries; the Brazil Real has lost 15% of its value relative to the US dollar – an adjustment not much different from what has happened to the Japanese Yen. Both Japan and Brazil are major sources of tourists inbound to the US; AA happens to be the largest carrier from Brazil to the US and is starting two new routes in the midst of that environment.
We’ve already talked about the fall of the Wright Amendment.
Competitors are intensifying their strategies in key AA and US markets. Do you realize that AA did not win the US government contract for DFW-ICN despite the large amount of US govt/military traffic being one of the primary justifications for AA to start that route?
Increased salaries can only come from companies that demonstrate stable and growing earnings. AA and US have enormous financial and strategic risks ahead of them that will continue to be hindrances to labor’s ability to win and sustain pay raises.