Although some here continue to hope that belittling the length of my posts will change my behavior, I post what I post because it contains solid analysis that addresses the real issues which are being discussed. Copying and pasting articles yet being unable to even discuss the topic demonstrates to me that several people here really don't understand what drives the industry or can't adequately debate it. I don't play in sound bites. Belittling someone else because you can't contribute says far more about their own inadequacies than what I write. For those who can't contribute, sit on the sidelines and watch. Your continued attacks, including thru the use of the post voting system, simply embolden me. Let me be very clear that I will not be bullied into silence by those who don't like what they read but can't argue against it; the history of the human race shows that such attempts have never worked anyway. If you don't agree or don't like what someone says, then have the backbone to stand up and engage in debate.
There are people who can discuss the issues and you, Bears, have demonstrated that you are willing to wrestle with the tough issues. I am regularly told that my contributions regarding key strategic issues add value to this forum; when those affirmations stop, I'll pack my bags and go home. For now, it is highly unlikely that I will stop doing what I do here.
Bears,
I have no idea on what basis you believe that DL is any closer to any additional large group unions on the property today than they have had in decades, but since you have been saying the same thing for years and it has yet to materialize, it is probably prudent to wait until something is even close to reality before discussing it.
As much as you would like to argue about DL’s vulnerability in this merger, you need only look back over the past 10 years and see that while AA was petitioning the FAA to eliminate slots at LGA in order to improve congestion, DL was adding flights at both LGA and JFK as fast as it could. When slot rules in NYC were tightened, DL ended up w/ the biggest pot of slots at LGA and JFK and only added to that pile with the slot swap which was an acknowledgement by US that it could not compete in the LGA market at the size it once had done so and didn’t need the slots to support an operation other than for the Shuttle and to its hubs.
AA/US will have about two-thirds of the number of slots at both LGA and JFK as DL has. It is very hard to imagine how anyone can believe that a carrier who is two-thirds the size of another can reach parity with the larger carrier, let alone surpass them.
The whole issue of growth and market dominance in the NE revolves around the “DCA problem” which I have highlighted already. AA/US can push to retain as much of its slots at DCA as possible which will only open the door for DL to expand more at JFK thru an acquisition such as B6 as you note OR AA/US can divest slots at DCA either voluntarily (highly unlikely) or by DOT/DOJ order in a size that could be as large as AA’s entire current DCA slot portfolio. That would open the door for a host of new low fare competitor growth at DCA, undoing not only the above average revenues that US has enjoyed at DCA but also significantly weakening AA/US market share and revenue position up and down the east coast. WN and B6 are salivating at the prospect of new growth at DCA and if they get new flights, they won’t be adding them to ILM and MHT. They will add them in the biggest markets from DCA which include many that the combined AA/US serve.
AA/US’ ability to compete at the slot controlled airports after this merger comes down to an attempt to overcome strategic missteps that both AA and US have made in the NE over the past decade and were compounded by US’ decision to construct the slot deal so that they are already over 50% of the slots at DCA, making it impossible to add more flights without triggering a review of US government policy regarding carrier size at slot controlled airports.
The likelihood in my opinion is that AA/US will be able to add some but not all of the slots of AA to what US now has at DCA. AA/US combined have about 67% of DCA slots; US currently has 55%. DL and B6 combined at JFK have about 59% of slots at JFK. B6 adds very little to DL at LGA where combined they are both still at 50%, far less than US at DCA today or UA at EWR.
If the price of the merger is significant divestitures at DCA to low fare carriers (which lawmakers would love to see), then DL might be content to just let that happen because AA/US combined position in the NE would be seriously eroded.
If there are not significant divestitures and AA/US are allowed to combine the majority of their current DCA slots, then B6 very much becomes a target for DL.
All of these discussions raise the question of how big does a carrier really need to be in order to compete today. AA, DL, and UA will all be about the same size, each clearly with market strengths. Even with a much smaller size in NYC than DL or UA, it is ENTIRELY possible that AA could be able to successfully compete based on being more of a large niche operator focusing on O&D markets rather than the hubs that DL and UA have. Current evidence in the industry suggests that it is very unlikely AA could gain revenues on par with DL and UA who have about twice the number of seats in the region based on current schedules. But it is possible that AA could offer service in the majority of key markets in NYC, just as DL could do in BOS.
If there is any consolation for AA in NYC, I believe the same principle that is helping DL succeed at LGA will also help AA if it really puts its focus behind maximizing the use of its slots there (the whole LGA terminal situation is another issue for AA/US since you want to drag terminals into the discussion). LGA is the preferred airport for short haul travel from NYC while JFK is the preferred airport for longhaul travel. CO grew as large as it did at EWR because AA and DL basically let them and were too focused on the mindset that LGA and JFK were spoke markets that were divided between each carrier. CO succeeded by growing a hub. AA has enough slots at LGA and JFK that they could expand their presence in key markets sufficiently to be able to compete with DL and UA but likely would never be of a comparable size overall. AA would have the advantage that its flights would draw more local passengers per flight than would those of UA at EWR based on the dynamics of the three airports. AA’s growth at LGA could also further weaken B6 at JFK because so much of B6’s presence at JFK is to markets which are within the LGA perimeter. Thus, AA’s growth at LGA and JFK could well come at the expense of UA at EWR and B6 at JFK.
Finally, Bears, in case you have missed it, the Pan Am Worldport is just months away from being shut down as DL’s new concourse at Terminal 4 is ready to open. DL has already signed a contract to extend it before it even opens. How long T2 remains is anyone’s guess but may I remind you that even with the armpit facilities that DL has used, they still have managed to grow dramatically at JFK, overtaking AA and by in terms of both flights and revenue. If DL does go after B6, there will be no need to worry about T2. One way or the other, DL’s facilities at JFK will be on par with other carriers but DL is still pushing, but there is no reasonable scenario that will change the reality that DL pushes far more passengers and revenue thru its facilities today than AA today. If a great facility was all that was needed, AA should have been #1 at JFK years ago… and for that matter, DL should remain far ahead of the crowd at BOS.
