Originally Posted by
BoeingBoy
With 50% of available slots US can't fly routes like PNS-DCA non-stop any time they want? I guarantee you that if US thought such routes would be more profitable than some of the routes they already fly (like ILM-DCA) they'd drop the current route and add the "more profitable" route.
Sure, they could drop existing flights and replace them. What they want to do, though is add flights that might not be as profitable as the ones they operate today, but are more profitable than the ones they fly using their slots at LGA. (The ones they want to trade).
Originally Posted by
BoeingBoy
If military routes are so important, why did US say they'd offer non-stop service to MYR (a truly leisure destination) and not FAY (One of if not the biggest military installations in the country (personnel count)?
I was just using PNS as a random example. Any city that currently lacks nonstop service could be substituted.
Originally Posted by
BoeingBoy
So fares will go up, which I think is what I said. Plus it'll be easier to increase fare if no more lcc competition is allowed.
I can only go back to my point that neither US nor DL is currently charging one cent less than they have to, and that swapping slots will not change that. Can I say for sure that NO markets will see any increase in average fare? Of course not. But I think that these situations would be isolated, and that there is a pretty good chance that just as many, if not more, markets would see average fares drop, even without more LCC flights.
Originally Posted by
BoeingBoy
Which would benefit passengers more - more higher cost non-stops or lower fares from low cost competition? With all the slots US currently has, would not being able to serve a few markets nonstop be better than not being able to serve any new non-stop markets? Or is it just the new competition that US doesn't want.
That is the ten-million dollar question, and I think that the answer depends on your point of view. Smaller cities could derive tremendous economic benefit from new nonstop service to DCA or LGA, even with a legacy carrier pricing structure. On the other hand, if you live in DC and have a condo in FLL, a $50 average RT fare reduction because of new LCC service might save you $500 a year if you fly it 10 times (or it might save you 45 minutes plus gas to get to IAD or BWI 10 times a year). From my perspective, the former offers more overall value, but again, it depends on individual points of view.
Originally Posted by
BoeingBoy
And you're right. But the airlines/public/Congress did want something done about congestion before NextGen was a dream. And, of course, no incumbent airline wanted to shoulder the cost of reducing it's flights at those airports to ease congestion.
That's one of the brutal things about the airline industry...what is good for each carrier individually can be a big problem for the industry as a whole. You might be surprised regarding the second sentence. Supposedly, AA has offered to give up LGA slots, under the condition that they be
retired, not given to another carrier. They were denied. So they are still flying presumably unprofitable services, because the alternative, having them go to a LCC, is a worse outcome. I would give even money that if you gave AA/DL/UA/CO/US half an hour of antitrust immunity to discuss slots at DCA and LGA, they would come out of the room with an overall reduction - again, as long as the slots could be retired, not farmed out to LCCs.
Originally Posted by
BoeingBoy
Absolutely. And notice that the consumer isn't in there anywhere. That's for the government to worry about.
I'm going to have to make some distinctions here that may seem minor, but that I think are very important.
Overall, I don't think that the consumer needs government protection in what is in most cases a routine transaction. An airline offers a seat for a given price. If it is worth the consumer to pay that price for the transportation, he or she does so. If not, the seat either remains unsold or is sold to someone else to whom the price is worth it. Its a transaction freely entered into by both parties. In a deregulated environment, new entrants are free to come in and offer their own service and price to consumers. Again, under most circumstances, no intervention is required.
There are clearly some situations where barriers to entry exist (that's why this thread is here, after all). Slots, limited international rights, etc. will require some arbitrator to make a judgement on what is in the best interest of the public (or at least what is politically popular). Other situations (merger approval, antitrust issues, etc.) also require some government oversight.
In general, however, the goverment got out of the everyday route/pricing/capacity business when regulation went away.
(Note: none of my reply in this section refers to the safety oversight retained by the FAA).
Originally Posted by
BoeingBoy
One could certainl say that $10 to $20 higher fares will have little effect on a consumer but taken in total for all consumers at an airport the effect gets very large very quickly. Throw in the low cost competition (and frankly that's mostly who would benefit from the slot divestiture other than AS and maybe AC) and the advantage to the consumers as a group gets even bigger.
$10-$20 bucks spread across all passengers would absolutely be relevant. I just don't see anything close to that kind of fare increase resulting from this swap.
I actually don't even think AS would get any benefit, since I don't see them wanting to start service anywhere that would be allowed under the perimeter rules. The divestiture requirements were clearly crafted so that they could only be used by the major LCCs. There is no argument that having a larger LCC presence would lower fares at DCA and LGA. What's less clear is whether or not lower fares is the only "public benefit" that can accrue from additional air service.
Originally Posted by
BoeingBoy
In many ways we're saying the same thing but come to different conclusions. US, at DCA, wants to increase the advantage it already has without allowing any more competition. That's understandable enough, but not justification enough from a consumer standpoint for the feds to say "Fine, go right ahead." DL is a somewhat different case - they want to establish a domestic hub at LGA (and JFK/EWR don't have the facilities for another hub) - something US already effectively has at DCA. Plus DL wouldn't end up with as high a percentage of slots at LGA as US would at DCA. US, as far as I know, has no beyond perimeter slots at LGA so DL wouldn't gain the advantage of getting more beyond perimeter slots. On the other hand, DL does have some beyond perimeter slots at DCA, but I haven't seen if any of them are included in the proposed swap.
The only quibble I have here is that I don't think that DL could operate a true "hub" at LGA because all the slots are for specified time frames. I would not foresee them being able to horse-trade enough slot times to establish true hub-and-spoke connecting banks. They would, however, have enough mass to offer significant transfer opportunites, regardless of whether or not it has defined connecting banks.
You are right, we are approaching the same thing from two different points of view.
In summary:
I don't think the DOT needs to be inserting onerous conditions on a transaction that would help DL and US without materially harming competition.
You don't think that the DOT should allow a transaction that would increase market concentration at two access-restricted airports without conceding slots to allow more low-fare competition.
Fair enough?