Ambraciot

If DL can continue to operate MEM in the shadow of ATL I don't really see how MIA or DFW is going to interfere with the existing hub structure. ORD, DTW, CVG and MSP will step on each others toes, but even if ORD loses a few of its international flights, the new merged airline would be more competitive for Chicago O&D customers than AA or DL could ever be on their own. Likewise DTW, CVG and MSP might see some cuts, but DL would still be dominant and presumably profitable at them.

I really do believe that the AA and DL customer bases could be preserved throughout a merger, so the bulk of any cost reductions and fare increases would reach the bottom line.

MiamiAirport Formerly NY George

I agree with you, this deal gives DL some sizable pluses and DL could certainly make the hub system work to its advantage (no pun intended.) The question in my mind is what DL is going need to give up to make the DOJ approve going to be worth what DL would get out of the deal. And even at that, the DOJ will probably not look to kindly on a domestic airline system dominated by two huge global players.

bbkenney

Mostly, I just feel very sad about all of this. I have been a very loyal AA customer over the last 40 years, and exclusively since BN went down, simply because, on balance, they deliver a product I like. 40 minutes from my home I can be on a flight to anywhere.

I would hate to see a DL merger because I am concerned with what it would do to AAdvantage. Say what you might about AAdvantage, it has enabled my family and me to enjoy parts of the world we never would have and me to fly comfortably TATL/TPAC. And, well a US merger goes without saying. (Just incidentily , I rode on what must be the oldest AB320 ever built from LAX to PHX the other day. Dirty and worn doesn't begin to describe it.) And Doug Parker, well what can I say. IF 3 DUI story is true, and I am in no position to know if it is or not, the man should be in Tent City, not running an airline.


So I am glad I am almost at the end of my business travel days. We have a decent next egg of AAdvantage miles which I'll swap for OW flights should worse come to worse, but we are not there yet. I'll be rooting for current AA management (yikes, one is a family member!), to pull it out. And, WN isn't a bad gig if there are two of you and you buy up the middle seat!

Carolinian

I take it you have never tried to actually use any SkyPiles, aka the Zimbabwe Dollars of the sky? I had the misfortune of having my NW Worldperks miles milejacked into DL SkyPiles and had a devil of a time being able to use them for anything even halfway worthwhile.

CMK10

I just hope Gordon Gecko doesn't try to buy them, I still haven't forgiven him for what he tried to do to Blue Star Airlines

bbkenney

What?

sxf24

Why would any airline choose to focus on PHX over DFW? Outside of the weather, DFW makes for a better hub from almost every possible perspective: greater O&D and business traffic, more central location and fundamentally no LCC competition. Yes, you have WN and DAL, but they can't expand the number of gates or flights. Conversely, WN has unlimited growth potential at PHX plus you have G4 going after smaller markets out of AWA.

Say what you will about Parker and team, but I think they deserve some credit for taking two airlines that pretty much sucked operationally and financially and building an airline that has been modestly profitable despite having crappy hubs and limited international routes.

Ambraciot

Currently DL has almost no shot at the Chicago O&D market.

AA is struggling with UA, mainly because AA has a smaller total network than UA. AA and DL merging would greatly expand the number of cities reachable with a single, convenient non partner connection. The larger same airline route network is especially appealing to elites.

FWAAA

Chicago is no NYC or LON, but it is the third largest MSA in the country. That's why three large airlines have all maintained substantial hub operations at two different airports in CHI for many years. CHI MSA is 50% larger than the fourth largest, DFW.

And for most of those years, DL has had very little presence in CHI.

IF DL combined with AA, CHI would be one of the beneficial additions to DL's network.

True, CHI is not growing like the sunbelt MSAs, but its regional financial health far exceeds that of the very depressed areas like, say, DET.

Jacobin777

Can you define what "struggling" is here?

Ambraciot

Not winning and losing money on a lot of routes to ensure that UA can't win either.

FWAAA

UA had a profitable 2010 and is expected to report a large profit for 2011, so I'm not sure that consumer advocates would support the notion that UA should "win" any more than it currently does in CHI. High fares (sufficient to support sustained profitability) are recognized by most as a good thing. Completely "winning" in the nation's third largest MSA might draw the ire of those who favor consumer-friendly fares.

Ambraciot

So those consumer advocates would back an AA/DL merger, which would ensure UA had tougher competition out of ORD?

FWAAA

They might object strenuously, based upon market concentration in other markets.

Government antitrust enforcers have essentially given in to the idea that three strong competitors are enough given the widespread ATI granted to the three alliances.

On a city pair by city pair basis, a DL-AA combo would result in some diminished competition, like ORD-NYC, where DL has recently become the third major operator of frequent LGA-ORD flights. Same with ORD-MSP/DTW/ATL, etc. But overall, I subscribe to the view that yes, a DL-AA combo would ensure a stronger competitor to UA/CO in Chicago. For years, UA was the only domestic airline with rights to from Chicago to Japan and China. Finally, AA began to win some route cases, and the DOT expressly rationalized their decisions by stating that an award to AA would bring competition to UA in CHI.

Ambraciot

As someone with a moderate amount of experience with both OW and ST, I have to say OW seems a far stronger and more valuable partnership. I also have very fond feelings for American, its brand and the AAdvantage program. Delta's reputation is not quite as good and they are still digesting NorthWest.

If the DOJ doesn't stop Delta from acquiring AA, it might make sense for the AA name, program (with cuts) and the OW partnerships to continue. I'm sure ST would not need to wait long for a new North American partner. Perhaps LUV would buy LCC and create a new US that could join ST.

However I still think the most likely outcome is that a private equity group merges AA with one of the following regional airlines as AA exits bankruptcy: AS, B6 or VX.