Southwest Purchase of Airtran and US/DL Slot Swap

[does this plane go to paris]

I predict that in the future Southwest will purchase...drum roll...jetBlue!

Don't know where that came from, but lets see what happens! B)

I was talking to an agent a couple of months ago and she was telling me about what a stronghold US once had in Vegas. Then suddenly, she said, for no apparent reason, US pulled out of that market. I eventually heard that WN went in and filled the void left by US.

Is this true?

America West used PHX as a hub during the day and then LAS was built up as Night time Hub in the 80's. They used some pretty hefty marketing "Night FLights". The gamblers would stay all day, drink , gamble and come to the airport at 10pm and the last flight left around 2am and the passengers were all buzzed and slept. HP eventually built LAS into hub with flights during the day and night, which remained extremly popular. During this same time, the original USAir, bought PSA and attempted to build a hub there as well. In the late 80's and up to Gulf War I, they had approximatly 60 fights with plans for more as PI came into the picture. As soon as the war hit, USAir was the first to lay off and virtually left the west coast. HP was in no condition to expand and WN came swooping in getting California as the big prize along with the rest of the west coast, for the most part.

When America West entered BK in the early 90's, Herb Kelleher, CEO of WN, flew to LAS, looked at the growing city, booming building and knew that the largest airline serving LAS was in BK. He made some deals with the city and WN went from 30 flights a day, mostly to PHX and to Texas destinations, to their largest city in the system. After exiting BK, HP did retain the LAS hub but concentrated more on PHX and tried to build up CMH.

Once the "new" HP mergered with "US", they had a dilema. They were competing with WN on several fronts and losing a bunch of money. I believe the US LAS had about 140 flights a day and they are now down to 30ish? They pulled out of LAS because during our economic downturn, people are not flying to LAS like they used to and the hotels and airlines were practically giving seats and rooms away just to get people to gamble.

 

[NYGiantsFan90]

CLT is not an O&D hub, its a connecting hub, WN wont chase US out of CLT cause the majority of the traffic is connecting.

 

[BoeingBoy]

but it's that O&D traffic that makes CLT the highest yielding US hub by a significant margin. WN's entry into CLT won't necessarily chase US out, but any drop in O&D yield will hurt US.

Jim

 

[cynic]

but it's that O&D traffic that makes CLT the highest yielding US hub by a significant margin. WN's entry into CLT won't necessarily chase US out, but any drop in O&D yield will hurt US.

Jim

There are a ton of variables in the equation.
How many flights can WN add
What cities do they pick
Are the high yielding fliers willing to give up their status and * alliance benefits to go to WN

WN can't compete with the number of non-stop destinations, nor can they immediately add a significant frequency to more than a handful of cities. The impact on the overall bottom line will be minimal until they are able to acquire more gates.

 

[IberiaMAL]

but it's that O&D traffic that makes CLT the highest yielding US hub by a significant margin. WN's entry into CLT won't necessarily chase US out, but any drop in O&D yield will hurt US.

Jim

It's not like WN has mega lowfares.


WN from RDU - MDW = $482 R/T October 5th return October 7th (cheapest fare) - Nonstop and Stops


United from RDU - ORD = $427 - Nonstop

American From RDU - ORD = $427 - Nonstop


US Airways RDU - ORD = $360 - 1 stop


American RDU - ORD = $367 - 1 stop

JetBlue RDU - ORD = $382 - 1 stop

Airtran RDU - MDW = $418 - 1 stop

Continental RDU - ORD = $436 - 1 stop

Delta RDU - ORD = $442 - 1 stop



WN is the most expensive. WN's "low fares" at Charlotte will be offset by how high US and Delta can charge at places like AVL now. I'm not disputing that WN could bring down prices where US charges unfair sky high rates. Just not to Airtran levels.

Nonstop from Charlotte to Chicago is $633
Airtran offers a 1 stop connection MDW-CLT for $287
B6 offers a 1 stop connection ORD - CLT for $465




I don't understand "aviation experts" from blogs and such saying how fares will go up "across the board" from this merger, yet it's going to cripple airlines with all these new low fares. That makes no sense...

 

[BoeingBoy]

It's not like WN has mega lowfares.

Low fares is relative - did you ever stop to think what the legacies would be charging from ORD to RDU if WN wasn't in that market. US' lowest ORD-CLT fare is $403 plus fees on 10/5 - little less than what would be WN's highest fare. What do you think will happen to US' yields on routes to/from CLT when they have to match WN's lowest fares?

Will WN's entry into CLT cause a dramatic drop in O&D yields? Not necessarily, but when you're talking about the number of passenger miles per year in those routes, even $0.10 drop in yields is real money. Currently AirTran serves 3 routes from CLT and B6 another two - that's 5 routes. Yet O&D yield had dropped `9 cents since the first lcc route started to/from CLT. Just food for thought...

Jim

 

[IberiaMAL]

Low fares is relative - did you ever stop to think what the legacies would be charging from ORD to RDU if WN wasn't in that market. US' lowest ORD-CLT fare is $403 plus fees on 10/5 - little less than what would be WN's highest fare.

Currently AirTran serves 3 routes from CLT and B6 another two - that's 5 routes. Yet O&D yield had dropped `9 cents since the first lcc route started to/from CLT. Just food for thought...

Airtran had 200 dollar fares in and out of Charlotte. Airtran has 4 daily flights out of Charlotte. Obviously their is not much to Charlotte. Jetblue has 6 daily flights. That together is 10 daily flights. Charlotte only has 10X LFC flights.


Delta alone from Charlotte - Atlanta offers 11X flights.



And yes, Charlotte fares are cheaper. Ever since 2005, to be exact.




Southwest from Detroit - St. Louis has 2X flights. WN is not going to come to Charlotte and add 5X flights between say CLT - BNA. 5X Midway, 5X BWI, 3X Orlando, 4X ATL max in my opinion.



Yes, yields will go down on them routes. But it will not even put a ding in US at CLT...




When is WN going to overtake US as the largest carrier at Pittsburgh?



Fares will increase as a whole on the eastern seaboard. It's not all gloom and doom...

 

[BoeingBoy]

Yes, yields will go down on them routes. But it will not even put a ding in US at CLT...

You're certainly entitled to your opinion, as emotionally driven as it appears to be. Evidence from WN's entry into other US strongholds indicates you're wrong, however.

Jim

 

[IberiaMAL]

On an entirely different note, I was on the Southwest website when I thought I seen an add for US Airways out the corner of my eye.

Either WN likes US Airways marketing fonts and such or they are trying to take a subtle jab at US? I'm going for the jab. But I wonder how many people notice it

 

[FutureUScapt]

Southwest wouldn't bother with Charlotte at all if it wasn't going to profit in some way. And believe me, US Airways is still a target of interest for WN, but continue to close your eyes to that fact.

But that's just the point - WN thought so very little of CLT itself that it chose to instead begin flights from tiny GSP 70 miles down the road, which was a major strategy shift from what we had seen in the past few years with WN finally entering the larger markets in lieu of alternative secondary markets.

I guess you get to claim victory; I think many would've argued that when they said "WN would not enter CLT" that it assumed WN did not merge with another carrier that currently served CLT. But congratulations, enjoy your "victory," if it means something to you.

Sure, now that WN will be in CLT, I would expect to see them connect it to a few of their major focus cities like MDW, DEN, LAS, and probably a few more flights to BWI, but you aren't going to see a major WN operation in CLT. To think that CLT is one of the reasons WN is buying FL is downright comical. WN didn't buy FL to enter a market they could've on their own; they bought them to get better access to key business destinations in the northeast and to gain a foothold in the international market.

 

[BoeingBoy]

I'm deleting this rather than help bring CLT into another slot transaction thread. Jim

 

[ChrisUS]

http://www.examiner.com/job-search-in-baltimore/southwest-airlines-acquisitions-of-airtran-should-not-affect-jobs-at-bwi

Mr. Kelly stated during a press conference that while no specific employee plans have been discussed at this time, he feels the acquisition will create greater opportunities. Some employees may have to transfer, or change jobs, but no jobs should be lost.

Boy, haven't we all heard THAT one before? About 3 months before the layoffs are announced.

 

[ChrisUS]

I don't understand "aviation experts" from blogs and such saying how fares will go up "across the board" from this merger, yet it's going to cripple airlines with all these new low fares. That makes no sense...
[/quote]

Neither do they. Every merger they say fares are going to rise. WHY?? IF you have a monopoly and raise fares, you invite low cost competition in. Speaking of competition, this merger give WN a huge monopoly in BWI. They fly a monopoly on a lot of routes out of there. No one seems concerned but when US and UA wanted to merge, everyone screamed. Go fig.

 

[does this plane go to paris]

Boy, haven't we all heard THAT one before? About 3 months before the layoffs are announced.

Chris, WN is proud that they have never laid off an employee in their 39 years of operations.

 

[Maark767]

The FL acquisition changes a lot. SWA has 7 slots at LGA, FL has 20 which total 27. UA has 27 slots which was enough for the DOT to annouce a scam of a 5% or less market share. With 27 LGA slots WN is no longer a small player at LGA. WN claimed the slots were "public assets" and that neither DL nor US could choose which airline to give them to yet WN got all slots at EWR. They were "chosen". The DOT also had another scam that said that you had a to have a "blind auction" which guaranteed SWA getting slots at DCA & LGA and the DOT knew this. They did not allow US or DL to lease slots like AA/BA are allowed or like CO did for SWA at EWR. DOT is lot allowed to play favorites and they did and they know it. There is no way they can show up in court with a straight face and say that they treated DL/US fare.

And since B6 & WN will soon be at DCA it proves that any carrier who wants to get slots can get them. The slot swap is going to have to be looked at again.

Also if the DOT approves FL/WN without any regard to no competition in MDW or BWI or limited in MCO or TPA then something is seriously wrong there. WN & FL are the #1 & #2 carriers respectively at BWI.

I dont believe that US will merge with B6. If anything AA and B6 will continue and strengthen their codeshare agreement and someday become one. Also I think US will start selling off parts of the airline such as take off and landing slots at LGA and DCA . Then down the road after US becomes much smaller it will be bought by one of the big 3. Simular to what happened at TWA.