Mdw&ac Opportunity

[jimntx]

Southwest didn't "take over" 100% of DAL. Nobody else wanted it!
So why should the DOJ care? Any airline is free to come in and compete, provided they can obtain gate space. Just as Southwest is free to go into any airport and compete if we can obtain gate space. Southwest is just smarter about the airports they choose.

[post="172597"][/post]​

Oh, don't get me wrong. I was most certainly NOT criticizing SWA by any means. I don't particularly like to fly them as a passenger, but obviously, I'm in the minority on that point. One of the things I have always admired about SWA is just what you wrote. They see an opportunity and take advantage of it. Even more admirable in my estimation is the fact that gaining a "monopoly" in an airport, such as DAL or HOU does not result in sky-high airfares for the users of that airport as other airlines tend to do--see also US Airways and CLT.

I was just responding to the poster who thought that the government would not permit SWA to gain 80% control of MDW. My question was if that were so, why didn't they do something about CO's 80% control of IAH, or SWA control of DAL and HOU or Delta's overwhelming control (or used to be) of ATL. As long as the public is being served and not hurt and the public has other choices--i.e., they don't HAVE to fly SWA out of MDW. They can go just a few miles away to ORD--the Justice Dept. is not going to be concerned about a single airport. Especially, when that airport is considered to be the "secondary" airport for a metro area.

 

[Just Plane Crazy]

Oh, don't get me wrong. I was most certainly NOT criticizing SWA by any means. I don't particularly like to fly them as a passenger, but obviously, I'm in the minority on that point. One of the things I have always admired about SWA is just what you wrote. They see an opportunity and take advantage of it. Even more admirable in my estimation is the fact that gaining a "monopoly" in an airport, such as DAL or HOU does not result in sky-high airfares for the users of that airport as other airlines tend to do--see also US Airways and CLT.

I was just responding to the poster who thought that the government would not permit SWA to gain 80% control of MDW. My question was if that were so, why didn't they do something about CO's 80% control of IAH, or SWA control of DAL and HOU or Delta's overwhelming control (or used to be) of ATL. As long as the public is being served and not hurt and the public has other choices--i.e., they don't HAVE to fly SWA out of MDW. They can go just a few miles away to ORD--the Justice Dept. is not going to be concerned about a single airport. Especially, when that airport is considered to be the "secondary" airport for a metro area.

[post="172612"][/post]​

I think the criteria is if an airline grows by it self or if they acquire assets from other existing airlines. And it WN would acquire ATA assets it would fall under the anti trust laws.

 

[hobbes]

In the cases of routes and such, or the acquiring of the ENTIRE airline, yes I could see that definitely being up for review by the DOJ. But in the event of just buying up their gate space at a particular airport, I don't see how that would be regulated under the antitrust laws? Besides, as one poster recognized, MDW is by far a secondary airport in the Chicago area. Even if ATA pulled out of MDW altogether, it's not like Southwest's dominance there is inhibiting fair competition in the Chicago area. More travelers go out of ORD than MDW.

From what I've seen, it seems like the DOJ only gets involved when it's the total acquisition (planes, routes, gates, and employees) of another airline. Does anyone know any cases where it's worked differently?

And technically, if SWA did buy the gates, they would still have to buy the new planes to fly the additional flights. Which I think would probably fall in the area of "growing by itself." I can almost guarantee you that Southwest won't take the 737-800s from ATA, even if they were offered.

I think the criteria is if an airline grows by it self or if they acquire assets from other existing airlines. And it WN would acquire ATA assets it would fall under the anti trust laws.

[post="172637"][/post]​

 

[sfb]

WN's position at OAK and DAL was not created by acquisition. I'm quite certain that AA and UA, if nobody else will vigorously oppose any attempt to consolidate power at MDW. Either you believe antitrust laws apply equally in the industry or you don't believe they apply at all. I personally don't believe the DOT will allow WN to acquire ATA's assets in entirety, even under the failing carrier doctrine.

[post="172589"][/post]​

This would be opposed by DOT in the same way that they opposed the TWA-Ozark merger (STL), Northwest-Republic (MSP & DTW), AA-TWA (SJU), Texas International-Continental (IAH), Southwest-Muse (DAL & HOU), etc., right? It's very easy to make the case that consolidation at MDW would not lead to an unacceptable level of concentration in the overall Chicago market when the two large hubs are taken into account. The Chicago market share of WN and TZ combined is likely smaller than either AA or UA. Also consider that WN could agree to sublease a certain number of MDW gates upon request if it were necessary to get the deal done.

As others have said, if WN were to take ATA's -800's (or some subset of them) it's probable that they would go on some of the longer-haul routes where the capacity is needed and the winglets would be a help. Putting the -800's on long-haul also would help to ameliorate the longer turn times needed by a larger aircraft.

That said, it's not clear that Southwest would want the complication added by an aircraft seating over 150 passengers unless they felt that the scheduling problem would be manageable. In terms of equipment substitutions, they manage to deal with the smaller -200's and -500's. I suppose the biggest issue would be flight attendant staffing.

 

[WorldTraveler]

In recent years, the DOT and DOJ have tried to increase competition both by ensuring that new entrant airlines have access to facilities and slots, showing preference for low cost carriers. While you may cite the dominance hub carriers have at their airports, the DOT and local airport authorities have been very careful to ensure that there are gates available for new entrant carriers. In fact, one of the stipulations of the CO-DL-NW alliance was the release of gates at some limited access airports including several hubs as well as non-hub airports like BOS.

As for the argument that the government views a market on the basis on the city and not the airport, that is not consistent with DOT practice. The government has forced open access to LGA and DCA even though there are facilities and capacity available at other NYC and WAS airports. Further, ORD has capacity and facility limitations of its own.

Although there has never been a case where an LCC has ACQUIRED the ability to monopolize a market, there is plenty of precedent for network carriers and in other non-airline businesses. WN obviously has the advantage in that they do not have the pricing hurdle to overcome, but they still could control a very substantial amount of the access to an airport and that is not good for the consumer in any business – airline or not and LCC or not. I may be wrong, but I don’t think the government will allow WN to acquire all of the gates ATA holds at MDW but I’m not sure that WN really needs all of them. In reality, even half of ATA’s gates is enough for WN to substantially increase its presence at MDW, esp. since they will probably get the opportunity to dramatically increase their operations at PHL and other US cities in the near future.

 

[jimntx]

As for the argument that the government views a market on the basis on the city and not the airport, that is not consistent with DOT practice. The government has forced open access to LGA and DCA even though there are facilities and capacity available at other NYC and WAS airports. Further, ORD has capacity and facility limitations of its own.

[post="172698"][/post]​

I don't know that I disagree with your reasoning, but I must say that using LGA and DCA as examples is a specious argument. While "there are facilities and capacity available at other [area] airports," LGA and DCA are still the preferred airports in those two cities. Because they are the closest to the city center, business travelers, and thus the airlines, prefer them. Even [fill in name of the worst airline in your opinion] would have an unfair advantage if it "controlled" either of those airports.

 

[ramper_in_las]

if WN were to take ATA's -800's

WN will not take the 800's just for the fact we would have to put an extra FA on them.

 

[FA Mikey]

Also, in the battle of Midway, I have heard that the -800 has proven to be a tactical blunder as it barely can take a full load of pax out of MDW and still consistently reach west coast cities year-round. The -700 is not as limited.

[post="172596"][/post]​

Why is that ? Is there a short runway? Are there that many passengers? AA flys them from MCO to LAX, full boat no problem.

 

[sfb]

Why is that ? Is there a short runway? Are there that many passengers? AA flys them from MCO to LAX, full boat no problem.

[post="172783"][/post]​

Runways at MDW are relatively short (the longest is about 6500' if memory serves) and ATA really packs 'em in on the -800's. I think ATA has theirs configured to seat 175.

In recent years, the DOT and DOJ have tried to increase competition both by ensuring that new entrant airlines have access to facilities and slots, showing preference for low cost carriers. While you may cite the dominance hub carriers have at their airports, the DOT and local airport authorities have been very careful to ensure that there are gates available for new entrant carriers. In fact, one of the stipulations of the CO-DL-NW alliance was the release of gates at some limited access airports including several hubs as well as non-hub airports like BOS.

As for the argument that the government views a market on the basis on the city and not the airport, that is not consistent with DOT practice. The government has forced open access to LGA and DCA even though there are facilities and capacity available at other NYC and WAS airports. Further, ORD has capacity and facility limitations of its own.

You forget that gate availability at MDW hasn't been a barrier to new entrants with the Terminal Development Program providing a number of new gates, several of which are controlled by the city. And again, it would likely be acceptable for WN to agree to either cede several of ATA's gates to the city as part of the deal or agree to sublease unused facilities to new entrants in the future. To be honest, I really cannot see Southwest needing all those gates for several years. They could probably manage at least 50 additional departures from their existing gates.

The "stipulations" for the approval of the DL-CO-NW alliance were really very soft, largely codifying what those airlines would have done anyway at their hub airports. For example, the alliance had to give up four gates at DFW, which would have happened anyway with CO moving into Terminal E with DL and NW; DL will give up gates in Terminal A at IAH to move into CO's terminals and give up gates when it moves into Northwest's WorldGateway at DTW.

DCA and LGA are quite different in that they are slot-constrained, unlike MDW. They are also viewed as being the most convenient airports in their respective areas for business travelers, unlike MDW.

And in any case, I think you'd find it very difficult to argue that Southwest's market concentration at the airports it dominates has been harmful to consumers. Fares out of DAL, HOU, OAK, BWI, etc. are generally lower than those at airports in the same region dominated by network carriers.

All that said, I just don't see the need for WN to buy the gates and/or aircraft; it's just not an ideal fit for them.