US posts another record profit!

"Stronger revenue power" means that prices will rise, no? And higher prices are precisely the point of the antitrust laws. The Clayton Act prohibits mergers which would substantially lessen competition or tend to create a monopoly because of the "stronger revenue power" and the resulting higher prices for consumers.

Higher prices are not the point, monopolies are. And we are no where near a monoply with 4 strong players post merger. Read your last sentance, nothing about this merger meets that requirement.

This merger would not substantially lesson competition nor does it likely lead to a monopoly.
 
If there is no realistic means for prices to come down, then it doesn't matter whether it is a monopoly or not.

The DOJ's objections are that prices are rising and the latest financial results show very strong pricing in the industry.

The difference is that some carriers have not got costs under control, others still have inefficient networks from the perspective of revenue generation, and a significant group of the industry is facing competitive pricing pressures which they cannot overcome. Even though overall pricing is improving, it is not sufficiently strong to cover the higher increases in costs on a long-term basis.

The last week of earnings announcements did everything to convince the world that the DOJ is justified in asking for deep concessions from AA/US who based on current traffic would be the world's largest airline and have a dominant position in some of the highest fare markets.
 
If its monoply the feds are worried then they best better look to dl in ny atl msp dtw sea etc n all the other mergers they approved its gonna be interesting to see over the next month what happens
 
robbed,
you clearly don't realize that DL's hubs are some of the most competitive in the industry and yet DL has the highest profits.

Low fare carriers in ATL, MSP, and DTW all have 20% or more of the market. For CLT, DCA, and MIA, it is less than 10%. DL has less than 50% of the slots at LGA and about 35% at JFK, where B6 has a large hub. NYC is highly competitive. AS, not DL, is the dominant carrier at SEA.

As counterintuitive as it is to you, DL has more competition and yet DL as a company and its employees both make more money that the companies and employees of other airlines.
 
When it comes to the DOJ boogeyman that "ticket prices will rise," someone needs to point out that in terms of real dollars, the rise of ticket prices is LONG overdue. There needs to be some historical references on ticket prices from 5, 10, or even 20 years ago, with adjustments on cost-of-living vs today. The traveling public has been spoiled by cheap tickets available during the turbulent periods when there was a new airline seemingly every week and no one could make a profit (except off the backs of their employees.)
One of your best posts, and I agree 100%. With all of the rising costs of our essential items in life, I find it a bit disturbing that the DOJ's biggest consumer concern is the cost of a friggen airline ticket. God forbid that people finally pay a realistic price for a ticket that will enable a company to be profitable on a regular basis. If the airlines have to charge for extra items to make a profit, so be it.
 
Actually I do get it wt. My point is it just sound like doj is attackin us/aa bec they failed in blockin dl/nw ua/co and wn/fl deals knowing full well that tkt prices wld rise. Dl I be willin to bet never wld be able to be where theyre at if it had not been for ghe merger w nwa. Btw didnt nwa havena good size operation at sea at one time?
 
except DL SPECIFICALLY said its biggest revenue increases have come from ATL and NYC which DL built on its own and thru the slot purchase and from NRT where DL had no meaningful presence of any kind on its own.

The only real route between those hubs that is meaningfully a direct result of the merger is JFK-NRT which existed with neither DL or NW before the merger but which is one of DL's top markets and could never be what it was except for the PMDL hub at JFK and the PMNW hub at NRT.

Sure, DL is bigger in NYC because of NW's presence but the vast majority of the revenue that has been gained ahs been in highly competitive markets and where DL or NW would have almost entirely reaped the benefits on their own if the merger had not gone forward.

It also doesn't change that AA and US are enjoying the benefits of the reduced capacity that has come to the industry from the DL, UA, and WN mergers and yet AA and US have been the most aggressive in adding capacity to the system.

It is precisely because the DOJ recognizes that AA and US' moves do not jive with what has happened in every other merger and what will happen in a merged AA/US that the DOJ objects. There is no way that AA/US can repa the financial benefits of the merger by keeping everything they currently have, including the 10,000 extra employees compared to what DL and UA have for fairly comparably sized operations.

And wings, it is not the DOJ's responsibility to determine if prices are high enough to make a profit. It is their job to recognize if actions are taking place within the industry to limit consumer choice and raise prices and that is when they have the legal right to act. Right, wrong, or indifferent, the US government has no policy to ensure the viability of its own airlines- and that is just as much a reality for every other carrier as it is for AA/US.
Within that reality, AA/US has to prove that it is good for the well-being of the country.

The latest round of earnings reports only add ammunition to the DOJ's case.
 
Actually I do get it wt. My point is it just sound like doj is attackin us/aa bec they failed in blockin dl/nw ua/co and wn/fl deals knowing full well that tkt prices wld rise. Dl I be willin to bet never wld be able to be where theyre at if it had not been for ghe merger w nwa. Btw didnt nwa havena good size operation at sea at one time?
That's why US/AA asked for some of the information and analysis that the DoJ had gathered for those mergers.
 
Higher prices are not the point, monopolies are. And we are no where near a monoply with 4 strong players post merger. Read your last sentence, nothing about this merger meets that requirement.

Uhh, wrong. The higher prices you admit would result from this merger are due to the substantial reduction in competition. Read Section 7 of the Clayton Act:

No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.

See the part at the end? If the merger would substantially lessen competition OR tend to create a monopoly, then the merger violates the law.

This merger would not substantially lesson competition nor does it likely lead to a monopoly.

Perhaps you're right. Perhaps reducing the number of big airlines from five (UA, DL, AA, WN and US) to four (AA, UA, DL and WN) wouldn't "substantially lessen competition." Perhaps the judge will agree with you and Parker on that issue. I doubt it, but anything is possible.
 
I have to question the monopoly theory, as there are many routes today with no direct competition. DL may be the only choice in any given market out of SLC as an example, while US may be the only one out of BGM. Every airline has somewhat of a monopoly out of any one of their given strongholds.
 
When it comes to the DOJ boogeyman that "ticket prices will rise," someone needs to point out that in terms of real dollars, the rise of ticket prices is LONG overdue. There needs to be some historical references on ticket prices from 5, 10, or even 20 years ago, with adjustments on cost-of-living vs today. The traveling public has been spoiled by cheap tickets available during the turbulent periods when there was a new airline seemingly every week and no one could make a profit (except off the backs of their employees.)

Sure, prices need to increase to pay for fuel, planes, landing fees, wages, etc. And as I've pointed out repeatedly, the fares today are just barely higher than they were 30 years ago; that's nominal fares, not real, inflation-adjusted fares. As I'm sure you know, real, inflation-adjusted fares are down substantially over that long term.

Federal antitrust law doesn't prohibit price increases. But federal law does address, and in some cases prohibits, mergers where the goal and result is to decrease competition and thus increase prices.

Should the government have challenged some of the prior mergers? Perhaps. But that failure doesn't prejudice the government's case no matter how many times Chip and everyone else at US and AA insist that it should.
 
I have to question the monopoly theory, as there are many routes today with no direct competition. DL may be the only choice in any given market out of SLC as an example, while US may be the only one out of BGM. Every airline has somewhat of a monopoly out of any one of their given strongholds.

But, no one is stopping anyone else from flying those DL-only routes out of SLC. I'm sure AA has a few out of DFW and ORD that other airlines wouldn't touch with a 10-foot pole. If your boy, DP, had just kept his mouth shut and his typing finger still, the DOJ might never have stepped in.

With all this whining about the DOJ is just picking on AA and LCC, some are beginning to sound like those parents whose kid has just shot up a school, and the parent can only say "My child would never do such a thing. All 1500 of those supposed eyewitnesses are lying and just picking on my child."

The DOJ has enough evidence to at least bring a suit to stop the merger. Will they win? Well, I guess we'll just have to wait and see.
 
I'm pretty sure that anyone can also fly a majority of the 1000+ routes that the DOJ used in thier filing as well. Any carrier can fly from AVP to CLT if the wish to, but its doubtful that they will. Hope that makes it a bit easier for you to comprehend my point.
 
no, there isn't the ability for other carriers to enter many of the markets that the DOJ noted, both because of the size of the combined CLT, DCA, DFW, and MIA hubs which surpasses the size of combined competitive hubs such as ATL, IAH, and IAD but because many of those hubs don't have sufficient space to accommodate competitors. Part of the problem is related to DCA's slot controls but part of the problem is related to sheer mass of the combined AA/US and the lack of competitors in key markets.
Note that many of the city pairs involved are to small cities that are attached to those hubs including small cities that are served from DFW and PHX, for example

The sheer nature of the airline industry doesn't mean that service will be added to a city just because there is access to competitors.

The DOJ is acting because there is no meaningful competition, not because there could be. The DOJ's action is to look at the present situation, not predict what could exist. The DOJ isn't even certain that service levels would remain the same in markets such as DCA even if slot divestitures took place unless there are requirements that the slots be used for specific service. The fact that B6 took a bunch of the divested slots from the slot deal and added a bunch of service in one market - DCA-BOS - which has virtually no impact on the rest of the US - is part of what is driving the DOJ's action. They want to know that markets are protected and mechanisms from previous mergers haven't done that.

And it still doesn't change that there are very real concerns that US and AA have stated repeatedly that the intention of the merger is to eliminate capacity and force up prices, something no other airline was accused of doing prior to their mergers despite the fact that happened anyway for one reason or another.
 
Without getting into a full page rebuttal, you do realize that many of those small markets have fewer than 10 psgrs a day traveling them. Does DL or UA have any such city pairs that are already in the same position? If so, shouldn't they be subject to the same scrutiny?
If not, why weren't they prior to the mergers? A monopoly is a monopoly, correct?
 

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