Originally Posted by
FWAAA
I'm not convinced that industry consolidation is likely to lead to any increased pricing power. And it doesn't have to. All it has to do is result in a new equalibrium between the supply of people willing to pay more and the airlines that routinely charge more.
There are different ways to say this, but yes, I think your logic is correct.
The guy in charge of setting fares for USAirways is Parker's long-time "right hand man" Scott Kirby. Kirby is a genius at pricing. I'm sure he's the guy who's overseen all the modeling on the Delta merger.
It's no secret that Delta sells lots of domestic junk fares. For years, they've been flying too much domestic capacity. Too many seats, too many junk fares. Of late, Delta has tried to curb this capacity (send widebodies overseas), but it's not enough, especially as low cost competition has heated up along the East Coast.
By merging and cutting capacity about 10%, the idea is to get the average fare up. Bye-bye to "excess" inventory and junk fares. This is obviously bad for mileage runners and others who like to buy rock-bottom tickets (including me!), but good for airline profitability.