Not that we customers matter in this deal, but I was wondering if it might be worth it to throw in our two cents to those who might be able to hamper it. What if someone wrote a letter of petition to ditch the merger, then passed it around through the post to the FTers who oppse the merger so their (and anyone else's) names, addresses, signatures, etc. could be added. The last person then mails it back to the first, who then sends copies to the powers that be...US, UA, DOJ, Congressional delegates, etc.?

I realise it would be a lot of work for what may be a futile cause, but it just seems like we should DO something...ANYTHING... I dunno. I know I wouldn't have the time to organise anything like that, but I'd surely support it!! Hmm...well, those were just my random thoughts just now. Take 'em or leave 'em. http://www.flyertalk.com/forum/wink.gif

------------------
"Visualise whirled peas."

NATHAN PRODUCTIONS
Professional Music, Audio Production, and Website Design
http://www.nathanproductions.com

Well, I was definitely going to write a letter to the DOJ -- I've written to the government in the past, and most time gotten a response, so I figure it doesn't hurt. If you can find a good address to send to, I'll write...

Joel Klein, the Assistant AG in charge of the Antitrust Division (antitrust@usdoj.gov) is probably a good person to start with.
http://www.usdoj.gov/atr/contact/emailklein.htm

I am all for the merger. Getting west out of Charlotte would be a nice change.

I'm also pretty opposed to the federal government, especially this idiotic DOJ, getting involved with the free markets in any way.

dingo -- A market is only "free" as long as competition exists.

Living in Charlotte, I have plenty of competition despite USAir controlling like 90% of the market. Additionally, if competition is restricted b/c consumers have created a monopoly, then it seems the market has spoken. Free markets have nothing to do with the number of choices provided the choices haven't been limited via illegalities.

In following the Microsoft case, I've heard ridiculous statements made by people like Ralph Nader. I know it doesn't apply here, but one of the arguments he had was that Microsoft's profit margin is too high. I don't want the government to determine what an acceptable market share is, nor do I want the government saying that b/c a regional monopoly exists in air travel a merger of two legitimate companies that combined control a small part of the world travel is illegal. We can agree to disagree, but I'd prefer to spend my tax dollars on something more useful to me than quasi socialism.

One post suggests that DOJ should not block any merger. Is the following scenario possible?

1) UA+US goes through.
2) AA+NW occurs in response.
3) feeling threatened, DL takesover CO
4) (maybe/maybe not) AA takes over DL, a new Braniff 4 takes DL's DFW routes and goes bankrupt, a new USAfrica Airways gets DL's JFK routes and also goes bankrupt.

Even with scenario 1/2/3 and not 4 happening, one airline raises fares 10% and the others follow. Another then adds a fuel surcharge of $15 per segment and everyone follows. Yet another raises fares another 10%. Northwest, who often forced fare increases in the past, has been absorbed.

Even doctor bills aren't subject to this potential price gouging. Medicare or HMO's pay them a low amount and that's final.

TFNF,

Thanks for the idea. I have sent a message to the DOJ. I will be sending messages to my Congress Critter and Senators as soon as I get a chance.

In case anyone is interested, you might go to www.ftc.gov (http://www.ftc.gov) . There is a link there to a page where you can file an anti-trust complaint.

For me personally, this merger would be a disaster. Over 90% of all jet traffic at my home airport would be served by United if this goes through. Combine that with United's lesser FF program and this whole deal sucks.

That's what it really comes down to. Places like PIT and CLT, we're not going to see much difference, other than crappy service and a crappy frequent flyer program. Of course that's not an antitrust concern. However, smaller cities will feel a bite. As I've posted elsewhere, there are dozens of smaller cities between PIT and ORD that are fought for fiercely between United and USAirways. Of course Northwest, American and the others get into the fray too, but I've noticed that since these cities offer good connections to PIT/ORD, both UA and US usually start the fare wars. It's cities like this that'll suffer -- they'll get the high fares of a hub like PIT/CLT without the service, lose/lose.


[This message has been edited by dg1 (edited 06-06-2000).]

Here are addresess ( I believe USMail to be more effective) for people who are interested in writing re: this merger:

Office of Policy and Evaluation
Room 394
Bureau of Competition
Federal Trade Commission
Washington, D.C. 20580

Assistant Attorney General Joel I. Klein
Department of Justice, Antitrust Division
950 Pennsylvania, N.W.
Washington, DC 20530

While Mr. Shuster is a rep from PA he's also Chairman of the Committee on Transportation of Infrastructure so it can't hurt:

Representative Bud Shuster
2188 Rayburn House Office Building
US. House of Representatives
Washington, DC 20515

Individually, I'd suggest senators and your congressman, and county government and city government. Good luck http://www.flyertalk.com/forum/smile.gif

I actually am writing in favor of this merger... especially since I was a Chairman's Prefered in the past and now a 1K with United.. I beleive that United's strength and route structure would really improve options for flyers. I was really impressed that PDX would finally get some nice East routings....

One thing you need to remember or think of, USAirways's FF benefits are only so generous because they are #6. Even withOUT the merger, if USairways attracted more flyers and grew its routes.. it would eventually cut back. Alot of the promotions, certs,etc... exclude PHL, PIT and Charlotte. USAirways already took away Club benefits from its Chairman's Prefered. How long before they get rid of unlimited upgrades for you and your companion??

Everyone's entitled to their opinion (but when it's not mine it's wrong) .. Just kidding <grin>...

Sure, it may just be a matter of time before they cut benefits even more, but I don't see that being really necessary. Even though it's slightly harder as Chairman's Preferred to upgrade now, percentages are still 95%+ and I still often see empty first class seats, so even lower levels have chances if they want it. USAirways benefits are similar to DL or CO, and THOSE are US's major competitors on the East Coast, so their's competitive pressure to keep the program as is. American and United are similar programs too.

They comped me club benefits this year, so can't comment on that. It's really not that valuable a benefit anyway IMHO. Most promotions I've seen are valid everywhere; just the cheap fares are not; I can always drive to CLE/CAK/CMH for those.

I agree it would be nice to get to Portland non-stop, and if the merger goes through it might be the last United flight I go on.

I don't understand the 'United's strength and route structure' comment. If you like/need that, fly United... The rest of us don't need/care for it in the first place to be flying US. That's the same stuff that Goodwin is feeding the public and it just amazes me that people fall for it. Fly United NOW if you want/need it and leave USAirways to grow on its own to be a real competitor!

dg1 is right. The argument that a merge with United will open up a world of new destinations for US fliers is bunk! And I disagree with Randy's assesment that all us US Airways fliers just can't wait to use our miles to go to Hawaii. I live in the DC area. If I needed a global behemoth of an airline I would have been flying United long before now. The US Airways system fits my travel pattern and I've been treated very well as a US2 (Pref Plus, now Gold Preferred) for 5 years now. I've used partner airline benefits without any trouble to travel where ever I needed to go outside of the US route system (Australia, European destinations not served by US, etc.). I'm against the merger. If it goes through, I'll seriously consider a switch to CO or AA. DL is out for me - can't stand their no upgrade on discounted fares even for elits policy. Time will tell. http://www.flyertalk.com/forum/smile.gif

If the buyout goes through and AA/NW and DL/CO combine, I can hardly wait until one of them goes on strike. What a mess that would be.

Dingo--I have to reply to your statements regarding the "idiotic DOJ" getting involvedin free markets, and DOJ involvement being quasi-socialism. It is quite clear that you have no concept of the importance of the antitrust laws in our economy and society. Well, I hate to get on my soapbox, but as an economics major and a former attorney with the DOJ Antitrust Division for six years ('81-'87), allow me to enlighten you.

Free markets only really work in the presence of competition. Monopolization is the antithesis of perfect competition, and, hence, the opposite of a free market. In this case, you cannot argue that airlines should be left to their own devices, because many of the barriers to entry in the competitive field have been created by the governments (i.e., limitations of landing rights; allowing airline "ownership" of limited gates at publicly financed (in part) airports). If you are going to get the government out, you have to get them completely out--like giving away landing slots and airport gates in a lottery, rather than let airlines maintain control of a publicly financed but not controlled barrier to new entrants.

You aren't arguing for "free markets", you are arguing for uncontrolled capitalism--there is a big difference. To cite just a couple of examples. John Rockefeller's control of STandard Oil at the turn of the century would have strangled the American economy if it hadn't been broken up by the government. And harken back to the days before the ATT monopoly was broken up--you paid what ATT told you to pay for the rental of your inferior phone, which you could not own, they would not let you attach any other devices they didn't sell you to their telephone lines (i.e., the computer you just used when you posted your messages) and they prohibitted access of other companies into the long distance field, which have now driven down the price of telephone service dramatically. That's a free market?

The concept that companies should be left to their own devices, and that the free markets will be better off is fallacious. There have to be rules of the game. Those rules are contained in the Sherman Antitrust Act, and our other antitrust laws, which the Supreme Court has rightly called the "Magna Carta" of the free market society.

The antitrust laws do not seek to put artificial limits upon a company's profit levels. But anyone should be concerned about dealing with a company which can make unlimited profits--that means that they have market power, can raise their prices at will, and that consumers have no viable option to dealing with that company. That's the definition of a monopolist.

So, Dingo, you have to ask yourself, do you want to live in a society in which there is only one phone company, one gasoline company, one car company, one bank, one internet service provider, one television network, and one airline? I think not. "Quasi-socialism" was when ATT decided what was best for you, and decided what kind of telephone equipment you could have. There were three styles of phones available, that's all, take it or leave it, because the monopolist had decided the question for you, and you had no real choice.

As to me, I'll take the antitrust laws any day.

Well said, Djlawman!

A good left winged opinion. You are treating the symptom in this case and not the cause. If government were to focus on anything, it should be to level the playing field for new guys in terms of what prevents them from starting up. There are many barriers in place that benefit the airlines, but were concessions to the airlines. USAir can't control how many take off and landing slots they have unless someone let's them control it. They don't own the airport.

Standard Oil did not have a corner on the market for fuel because they alone were nasty. Bring in the railroads and other vertical industries into collusion and the result was ugly. Speaking of railroads, wasn't there once a monopolistic state there as well? They controlled the lines and wouldn't share, charged high prices and squeezed the competition. What happened to them? Oh yeah, technology and the market changed.

On AT&T, you can't say that things are completely better and that if left in tact things would not have changed. That is another component of markets. As a small business, I have been repeatedly slammed by fly by night phone companies that charge up to $30 (yes $30) a minute. Where do I end up? Right back with Ma Bell. Before the break up, I could talk with a person for information for free. And I didn't have to hang up on 50 telemarketers a month trying to rip me off.

So I'll stick with my "idiotic" tag for the DOJ. You're a bit too quick to slap the word monopoly on things in my opinion...Microsoft does not have a monopoly, and if you're saying that UA would you're crazy. Some people may not like it and that's fine. But begging the government to make icky things that I don't like go away shows dependency and a lack of faith in 'the system.'

I do agree with "...you have to get them completely out..." 100%. And that is my overall point. Less government...everywhere, in every way.

I strongly see things differently than you when you say that "...anyone should be concerned about dealing with a company which can make unlimited profits..." in this context. I rather think that everyone should be concerned when we feel it is up to the government to decide what level of profits are appropriate and which are not. That is exactly what I heard Mr. Nader say on television. His personal perception of what is too much may not be mine, nor anyone's.

Do I want to live in a country in which there is only one of anything? No I don't. I don't want one Federally regulated and legal means to deliver mail (it is still illegal to send non-critical mail any other way) at the price mandated by the federal government (they turn a profit on this by the way to the tune of over a billion dollars a year). I don't want another former governement agency like SALLIE MAE that used their government backing and funding to squish private business out of the market. I don't want one choice for electricity or natural gas. I don't want one of anything. If one of many gravitates away from the pack and it creates a monopoly because of that, isn't it just possible that the markets did work? So they should be punished and brought back to the rest of the pack?

Regardless of the discussion on monopolies, US/UA cannot be considered a monopoly. These comments seem to stem from fear that the seat I wanted to have for my next free trip may not be there when I'm ready to book. Using the DOJ to make sure you can get a free trip seems petty to me.

I'm off my soap box as well.

Dingo, interestingly enough, I somewhat share your opinions. I'm usually the type that says less government is better in ANY area of life. The government should NOT have to make decisions for the public, and the government should NOT regulate businesses with the excuse of "limiting competition". I see your point completely, and I even agree with a significant part of it.

Unfortunately, as I see it, there's only one problem with the scenario you propose...MOST CONSUMERS ARE STUPID. Most consumers will just go along with whatever is thrown at them. Tell the average consumer who flies a few times per year for the family holiday that United is best because they have the strongest route system using a flashy ad campaign, and they'll believe it! Tell consumers that United may offer less frequent flier benefits, but that their free tickets to Hawaii are a good tradeoff, and they'll buy that. Most consumers aren't intelligent enough to make good decisions on their own--that is, they make decisions based on the herd, and not always on what's best for them. Average consumers aren't persistent enough to demand more for their money, and that's what allows large companys to rape and pillage those of us who know better--because we who realise we're being scammed are just a few individuals who account for a relatively small portion of their income. And, THAT is what allows huge airlines like United to offer such shoddy FF benefits and programmes. The majority of consumers are silly enough to buy their product "as is", leaving the more savvy, less numerous frequent flyer relatively powerless when it comes to getting the benefits he or she deserves. (Just read the United board for proof of that.)

So, sure...whining to the federal government so I can get my free award seats, so I can upgrade ahead of airline employees, and so all the miles I've been hoarding are actually worth something may be petty, but honestly, am I going to depend on what you call "faith in the system", i.e., the majority of consumers, to protect my benefits? I think not. Quite frankly, it's not that large corporations in a free market economy make government regulation necessary, it's that the consumers who don't know a good small business from a flashy (and maybe less-suitable) large one make it necessary.

Of course, those are just my own whacky ramblings and opinions...

And...no offense to all you FlyerTalkers and current United customers...I'm sure your choices in travel are founded on good intelligent reasons. http://www.flyertalk.com/forum/wink.gif In fact, I've often thought the airline industry would be much, much better if it were run by FlyerTalk!! http://www.flyertalk.com/forum/smile.gif So anyhoo, that's just my $0.02.

------------------
"Visualise whirled peas."

NATHAN PRODUCTIONS
Professional Music, Audio Production, and Website Design
http://www.nathanproductions.com

I'll jump in and add my $0.02's worth to the debate between djlawman and dingo.

Firstly, IIRC, free markets work when you have many competitors and many buyers. Once you reduce competition down to a few buyers or sellers (but more on the other side), you'll start having monopsonistic pricing. Whether UA-US combo will lead to more monopsonistic is debatable but we certainly see higher prices out of upstate NY where there are few suppliers of air services.

Secondly, there is ease of entry and exit. Today, many industries are capital intensive and there are high barriers to entry. Capital doesn't seem to be a problem for buying planes but the U.S. Government could certainly reduce barriers to entry such as making slots easier.

In a free market, pricing is "rational". Competitors will drop out of the market when they make a loss on a product or a service. The airline industry seems to have predatory pricing practises such as bracketing. Unless predatory pricing is eliminated, the upstarts won't stand much of a chance.

FWIW, this came up today:
http://www.msnbc.com/news/417880.asp?cp1=1

I sent off over a dozen letters yesterday to politicians up and down the food chain and already have gotten a phone call from one politician himself, who demonstrated a good grasp of the issues involved.

His thoughts were primarily that there ARE going to be three mega airlines in the next 24 months (US/UA, AMR/NW, DL/CO with TWA 'out there') and that all we can do is secure the best deal/guarantees we can get from the airlines.

I mentioned how merging with America West or some other West coast carrier would be better than being eaten up, but he told me that international service is where the future is... US apparently had 1.5 million international passengers, UA had 11.5 million, while British Airways had 30 million..

He agreed that joining an alliance and maintaining a separate airline would have been great, but he doubts it's going to happen due to mega-merger mania.

All in all, I was very impressed. He was very open and frank in discussing the issues. Makes me almost believe in the American political system! http://www.flyertalk.com/forum/smile.gif

Moral: Write, it can't hurt!

What will happen, only the Shadow knows, but watching the committee meetings today, Congress was quite upset with current levels of customer service and could not believe bigger would mean things would be better. Wolfe seemed to defend himself well, but our fellow Congressmen and woman did not seem to be going for it. Presonally I think USAir should be merged, they are awfull, I still miss Piedmont at BWI and those great international flights.

http://www.flyertalk.com/forum/confused.gif

Just got back from my Latin Pass run, so I didn't reply right away.

Anytime you reduce the number of competitors in a market, it increases the ability of the remaining competitors to raise, maintain, stabilize or contort what would otherwise be the "free market" price. This is called market power. As someone has pointed out, just look at what happens whenever Southwest enters into any of the supposedly competitive airline markets controlled by the majors. Take a look at the price per mile of a flight between two hubs of the same airline, where there is no direct flight connection on any other airline. Such as US Air between Phila. and PIT. Never any competition, and the cost per mile for the ticket is absolutely ridiculous.

As to Dingo's contention that UA/US "is not a monopoly", this is an incredibly simple and sweeping generalization that shows no appreciation for the complexities of analysis required to determine whether a competitive market exists. Competition in the airline industry is measured in "city pairs", that is, the competition for the route between city A and City B. UA/US will virtually eliminate competition for a significant segment of the flying public on a very long list of city pairs, for example, PHL-SFO, PHL-DEN, PIT-DC (DCA or IAD), PIT-DEN, PIT-SFO, CHarlotte to Chicago, to Denver, to San Fransisco, etc., etc., where the two airlines currently handle the vast majority of the traffic. The price elasticity of demand differs among different travelers (which, in plain language, means that some travelers, e.g., tourists on family vacations, are willing to take connecting flights of longer duration to avoid a higher price direct flight, while others, typically businesspeople on tight schedules, are not). Indirect flights through other hubs may be sufficient to keep down the prices of tickets charged to the value-conscious leisure traveler, but not to the schedule-conscious Monday through Friday business traveler. The lesson of the last twenty years is that new competitors are virtually unable to start up and compete with the established majors on established major city pair routes, because they can't attract enough new business (and, hence, market share) through low prices, since the established airlines will simply decrease their prices to match (or better) the price offered by the upstart. The anticompetitive nature of airline mergers is further heightened by the ability of each airline to instantaneously change its prices to match the low prices adopted by others in the market, which gives one airline no incentive to decrease prices to gain market share, since it will be matched and will not likely drive any new market share to the originator of the price decrease (unlike some other industries where prices are not publicly available at a moment's notice).

It's a great idea to eliminate government barriers to entry in this industry, but completely unrealistic and not likely to happen. Gates are unlikely to become unregulated, because airlines are unwilling to guarantee some of the costs of federal and municipal airport construction unless guaranteed gates. Once gates are controlled and not available to all, the free market is already significantly screwed up. Another significant barrier to entry is government licensing of entrants. Each entrant has to have significant capital, qualifying planes, licensed personnel, etc. All of that takes time and money. These are market imperfections that distort free competition. That is not to say that they are not necessary or desirable. I myself do not want to fly on planes as to which there would be no govt. inspections or licensing of the pilots. But those are all externalities which interfere with the free market system. The totally free market would say that the market would regulate entrants by the cost of lost lives and planes for those who didn't do proper plane maintenance, or pilot qualification. Personally I WANT some government regulation in those areas. How much of a "free marketer" are you, Dingo?? Are you willing to forego the externalities of FAA inspections of planes, certification and licensing of pilots, required capital standards for airlines to have sufficient capital to get planes maintained, or pay damages when planes crash??

Uncontrolled, markets almost always tend to evolve into Monopolistic control, taking advantage of the ability of larger, more efficient companies to put smaller ones out of business. If the airlines all merged into one, how would a new entrant EVER get off the ground? (Sorry, couldn't resist the pun.) Any attempt to start a new airline would be met by predatory pricing in the new airline's markets in order to destroy their attempt to build the market share necessary to survive. But predatory pricing is illegal you say? Yes, because of the antitrust laws. That's just how Rockefeller and Standard Oil got control of the oil market--by driving all of his competitors out of business, by whatever means necessary. Standard Oil didn't get control because they were the only nasty ones--they were just the NASTIEST. And if you think they cared a **** about customer service, you are mistaken.

As to the suggestion that these mergers are necessary for international competition, that is a red herring, especially so long as there are governmental limitations on other international airlines competing in the US. If those airlines could compete in the US (Virgin, BA, KLM, Swissair, etc.), then the US airlines would face much more competition. But so long as those barriers still exist, you can't allow this whole spate of mergers. The international flights constitute a small percentage of total passenger miles for the US airlines. But, like full-fare business passengers, they are very profitable, so the airlines are willing to chase after them.

I don't like the idea of regulating companies' profits, and the DOJ is not involved in that business. None of the evidence in the current Microsoft trial dealt with their profit levels, but instead with their conduct (refusing to license Windows and IE to some computer manufs. unless they agreed not to put the Netscape browser on their machines, for example). I am not going to debate the Microsoft trial with you. But there is a need to regulate business conduct to prevent every industry from devolving into monopolistic control. You are right, the post office is one, but DOJ can't do anything about that, Congress will have to. And you may be pissed about all of the phone companies contacting you. But that is competition. You can't have it both ways--want free markets, but yearn not to have a competitive phone market, so you won't be bothered by their attempts to sell you their services, and then say that you want to get rid of the antitrust laws. Many of your comments seem like you would be happier if there were just one vendor for everything. I don't think many consumers agree with you on that.

Companies act for the good of their stockholders, to increase profits. The best way to increase profits is to eliminate ALL competition (either through buying them or driving them out of business). Without the antitrust laws, there WILL only be one major airline in the US. "Markets worked when one gravitates away from the pack and gains monopoly power?" How do you figure that? You may be satisfied with only one airline, because without the antitrust laws that is inevitably what you will get (and I guess you will conclude that the markets worked). However, I don't want that(maybe you do, so then you won't be annoyed by all those pesky commercials for different airlines, and annoying newspaper adds touting fare sales.) You also won't have to worry about traveling much, since you won't be able to afford it.

On the subject of the railroads, by the way, they eventually succumbed largely to the competition of taxpayer-subsidized trucking (who didn't have to pay for the roads they drive on, unlike the rails), but the railroads also were forced into competition by a whole long series of antitrust court cases which forced them, for example, to open up access to monopoly facilities like terminal facilities in many cities.

Terenz, I have to clarify your post. A monopoly is the economic state of having only one seller of a product (i.e., ATT pre-breakup). A MONOPSONY is a different but related state of having only one BUYER of a particular good or service, and that buyer having the power to set the price at which it will buy the good and keep the vendors from being able to earn profits on the sale of their merchandise or services.

Djlawman

****. That law dude knows some big words. Perhaps too big...perhaps the words have become too big by means that were not available to all persons...perhaps we should do something...perhaps they should be broken up into smaller more manageable words that we can all use. Just trying to add some humor. http://www.flyertalk.com/forum/smile.gif

I agree with DJLawman 100%...big words and all.