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Continental & United Merger supposedly more serious [Merged Threads]

Continental & United Merger supposedly more serious [Merged Threads]

 
Old Feb 6, 2008, 9:19 pm
  #46  
 
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Originally Posted by fastair
Those objections were all stated a few weeks ago.

As for why they de-regulated...sure it increased competition as well as opened up the industry to market forces. Well, by the same logic, mergers are part of the market forces. If congress deregulated, then let market forces prevail, and allow the mergers to happen and airlines to sink or swim. They want their cake and they want to eat it too. Much competition from deregulation, but also hub and spoke systems for coverage to all the tiny cities that a LCC will never touch.

I tell you this, if the congressman from MN had to choose between losing 10's of thousands of jobs in his state and fewer non-stop flights/service, or higher fares but better route structure in MSP, becuase NW could CHap 7, do you think he would change his song?

De-regulation has its consumer benefits, but true de-regulation allows free market successed and failures including Chap 7 and mergers.

Similarly RLA was in place to protect the delivery of goods and service necessary to the Fed (i.e. mail) and and the economy. It now stands as a de-railing point to the free market forces that would allow strikes and evolution of the industry. How can they say "we ALLOWED" economic forces to play in the 1970's? It isn't a RIGHT of American's to have air travel. There is no national Monopoly like ATT back in the 1980's in the aviation sector (at least in the US.) Margins of even the most profitable air carriers are NOTHING like margins of most sectors. It is a very capital intesive industry that has produced a historical negative return to those willing to provide the capital. Why should "The Man" expect to be able to force low fares, great networks, and losses for the investors year after year? Either re-regulate like a utility, or stay out out of the business (beyond regualting anti-trust concerns) then, maybe we could have a profitable national network with good service and premium products (and high fares) like some of the other countries have had.
There has been loads of consolidations - US Air was once Piedmont, Allegheny and America West. Who knows what happened to Eastern Air Lines? TWA is now American. Pan AM is gone. These were the titans when the markets were deregulated. The problem is not regulation, the problem is poor management and unions. First they gave too much then they went bankrupt and took too much back.

If you look at SouthWest, they are being hurt by high fuel costs, but they have been very profitable because they haven't tried to be all things to all people. No first class, no international, no frills but profit. Frontier was growing and then went international and is now trying to sell some of its airplanes.

I think you have a tough hill to climb saying that the problems in the industry are caused by regulators meddling. If anything, they have been bailed out by the government. They have escaped a Passenger Bill of Rights long past when one was due. They scraped billions of debt off their balance sheets including pension liabilities all through bankruptcy and goverment generosity.

Airlines gave up service so they could 'compete' with no frills airlines. Now they have less frills airlines because all of the money they have left after no frills ends up in Persia on Jet A. Consolidation will not lead to better route maps, better service or anything beneficial to the consumer. They will benefit the shareholders. That is a solid basis to oppose consolidation. If it harms the consumer that is justifiable cause for the government to put its foot down. UA has Global Services because they figured out that if they cater to people who buy expensive tickets through improved service they make more money....nobel idea that seems to be working in spite of my misgivings about the program. The airlines can be successful without consolidation. They just need solid management, and a solid business plan. Right now it is an industry all tangled up with each other in a fast paced race to the bottom. Fuel prices go up, ticket prices go up...I can live with that. That is economic reality. Airlines consolidate, supply decreases, demand is increasing, prices go up and consumers have fewer options....that is not something we should live with. If airlines go out of business, so what. It seems to me that is a good time for market forced consolidation as they can pick up a bargain like American did with TWA.

The airlines have not been exempt from market forces. They have just not responded to market forces and been able to maintain fare increases (competition) and they have been extremely slow to respond to changing market conditions (poor management and union problems) and they have been unable to develop original plans about how to cultivate profitable airlines (poor management). None of these things support an argument for consolidation.
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Old Feb 6, 2008, 9:53 pm
  #47  
 
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I'll be disappointed if UA merges with any airline. For all it's pitfalls, I am proud of flying UA and think that wonders could be done if the loyal Pilots, FA's, and other employees were just given a strong management structure and overhaul. Yes, we all know United is not doing well financially. But aren't there better options available instead of just the same old tired solution of merging?
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Old Feb 6, 2008, 10:01 pm
  #48  
 
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If you look at the route structure, it would compliment UA. Not only would it give *A greater access to NYC, LH/B6 would not be in direct competiton with a UA/CO combo. It would give UA access to the TX and the south, greater access to Europe and Latin America, and give CO access to a realistic Asia network.
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Old Feb 6, 2008, 10:04 pm
  #49  
 
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Originally Posted by DawgmanOH
* Upgrading to Hawaii or Int'l is a bizarre nightmare that is expensive (if you are lucky) and resembles one of the inner circles of heck.
Yeah, that Star Alliance upgrade system on UA.com was relative purgatory, eh?

Originally Posted by DawgmanOH
* 50% EQM for low cost fares. They are the only US based airline not to offer full EQM on all fares. Even DL came back from the dark side.
Well, the 1K lites on this board will be happy to know that only 75K EQM are required for top tier OnePass status as opposed to the 100K on UA.
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Old Feb 6, 2008, 10:06 pm
  #50  
 
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Maybe this is wishful thinking on my part but I think Tilton has been too desperate in pimping UA out for a merger. Like the desperate girl looking for a date to the prom UA will be left home sitting and watching reruns of "Sex and The City". UA be left out in the coming mergers on Consolidation Night.

My prediction - no merger this year and Tilton will step aside. He will figure that he has gotten all he can out of UA and will just move on.
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Old Feb 6, 2008, 10:59 pm
  #51  
 
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The necessity for airline consolidation can be summed up in one, inescapable reality: the industry is not now, nor has it been, sufficiently profitable to attract investment capital.

Everyone touts WN as the darling of the industry. Well, WN is the least ugly of an ugly lot. If you bought WN's stock 9 years ago, you would have paid just about what the price is today - zip capital appreciation. With a diddly 2 cents a share dividend, who's going to want to invest in a company like that? Do you want that stock in your 401k? Even WN is talking about reducing capacity this year.

The airline industry has several choices, of which consolidation is, IMO, the least offensive: a) bankruptcy for some; b) liquidation for some others; c) re-regulation (don't forget the railroads!); or, d) consolidation via mergers.

The only thing keeping airline stock prices from the deep six right now is investor hope that consolidation will occur and improve margins sufficiently to make the industry a worthwhile investment.

I predict it will be a game of musical chairs. DL-NW will go through, taking one seat off the floor. If CO-UA goes through, that'll take another seat away. The unlucky legacies will be those who don't have a seat when the music stops.

As for mergers being good for customers, I can only say this: some changes may occur that do not elevate the customer experience. But, if consolidation eventually leads to more rational (higher) pricing, the customer experience will improve because capital will return to the industry.
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Old Feb 6, 2008, 11:37 pm
  #52  
 
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Originally Posted by BostonHockeyGuy
I think you have a tough hill to climb saying that the problems in the industry are caused by regulators meddling. If anything, they have been bailed out by the government. They have escaped a Passenger Bill of Rights long past when one was due. They scraped billions of debt off their balance sheets including pension liabilities all through bankruptcy and goverment generosity.

This makes little sense to me. No meddeling? How many times has UA or AA labor tried to strike, ater negotiationg for years then "cooling off" only to have the only tool at their disposal,, a strike, be interfered with by both the exec, then the legislative branches? Major airline stike??? Closest thing to that in 20 years is NW mechanics, and that was a set up by NW mgmt.


A Passenger Bill of Rights that is long past due? IS that not meddeling in the economics of the industry? Is that part of the origianl Constitution? No, free market dforces will have you flying on airlines that meet your needs, or at least avoiding the ones that let you down the most. How are new govt regulations on delays (which are mostly caused by the FAA's fialure to grow properly over the past 30 years) allowing the market forces to appy? And in the same paragraph, these senators say that they want to interfere with mergers...and they say they have de-regulatd.


No, alas, they have de-regulated certain aspects. They have regulated others even more.

Even IF there is a DL-NW, a UA-CO, an AA-TW, and a US-HP, plus 15 other niche/LCC carriers (hellow...WN is HUGE domesticly....and this is what we are talking about...domestic regulation....open skies has effectivly de-regulated intl much more than the US has de-redulated US) is (4) major carriers and tons of LCC not enough competition?

How many MAJOR products have that kind of competition? Cable? NO Comcast/ATT are the duo-opoly. Mobile Phone? ATT/Sprint/T-Mobile/Verizon plus various smaller. Power....how many companies can you choose to provide you with power? Airline travel is NOT a utility like electricity that you have a "right" to. It is a comercial industry. You won't die without it. Goods and services CAN be trucked/trained/boated. You can drive from WAS-SFO....sure it will cost you MUCH MORE than a tkt and take 20 times as long, but there are options.

I am no economist, but for you to say that airlines aren't regulated, that they are just "bailed out" and that to furthur de-regulation and free market efficiencies, you need a "psgr bill of rights" to me makes no sense.


HonestAbe nailed it on the head. Glenn Tilton is a true CEO. He wants return on investment. Period. Airlines don't do that...becuase they aren't allowed to evolve freely.
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Old Feb 6, 2008, 11:46 pm
  #53  
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My issue with the merger is that CO will be the dominant partner and I assume we'll lose Mileage Plus to 'nOnePass'. Their international upgrades are of concern especially their stingy upgrade availability and huge co-pays:

BusinessFirst Select Economy Fares Upgrade Policy: Members who purchase fares other than Y or H* can pay a non-refundable service fee in addition to the miles in order to upgrade to BusinessFirst. Members will only be charged the service fee when the BusinessFirst upgrade has been cleared.

Service fees cannot be applied to future travel and are subject to change without notice.

Fare Class / One Way Service Fee
Y $0
H $0*
K/M $200
N $300
B $350
O (if applicable) $350
V $400
U $400
All other fares $450

* $200 for flights to/from Hawaii

Last edited by Markie; Feb 6, 2008 at 11:52 pm
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Old Feb 7, 2008, 12:01 am
  #54  
 
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What happens if Continental DOES Merge with United? Does US get kicked out of Star Alliance and replaced by Continental?
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Old Feb 7, 2008, 2:07 am
  #55  
 
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No, it will become a single airline, named (appropriately enough) ConU.

Seriously... someone hit it on the head a few posts up, United's clear investment in new seating / product for the Intl' birds means that the 3 cabin scheme is here to stay. E+ has such a great market recognition and profit potential that I can't imangine the new management wouldn't retrofit COs fleet to have it too.

I have no idea what will happen with the mileage programs and/or the clubs. Though I hate to say it, if CO sucessfully charges people a fee for upgrades then the new management would probably see that as a potential profit center too...

Whee! Prognosticating is fun!
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Old Feb 7, 2008, 3:13 am
  #56  
 
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The fees at CO don't bother me. It's the inability to do Day-of-Departure international upgrades. Also, standby at UA is just a prettier game.

Saver awards have been mentioned, but CO really is awful with them. Then again, if they join *, you still have access to partner inventory.

Basically, this will be great for me (other than the fact that it will certainly cost me GS because of the EWR hub), so long as 3 cabins, E+, and Mileage Plus remain. Since that is reasonably unlikely to be the case, I'm very much opposed to this move.
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Old Feb 7, 2008, 3:27 am
  #57  
 
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Originally Posted by BostonHockeyGuy
Who knows what happened to Eastern Air Lines?
Lots of people do, including me. If you don't, please find out, before making assertions.

As for a CO / United merger, it would be the best possible option if a merger were to happen at all. A good airline merging with a so-so airline will result in a better so-so airline. Can't be that bad. And the RCC's will get the as*.
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Old Feb 7, 2008, 4:55 am
  #58  
 
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Would very much welcome a CO/UA merger. I would be happy to forego a few int'l upgrades to Europe if it meant I didn't have to go to Washington or Chicago first. I suspect other NYer's would be too.

Adam
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Old Feb 7, 2008, 5:14 am
  #59  
 
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Originally Posted by adambrau
Would very much welcome a CO/UA merger. I would be happy to forego a few int'l upgrades to Europe if it meant I didn't have to go to Washington or Chicago first. I suspect other NYer's would be too.

Adam
Actually, when you speak for "NYers" you mean "NYCers" and "NJers." As a Long Islander, the appeal of EWR is non-existent.

That said, I like the idea of a UA/DL merger for a few reasons:
- Creating a true domestic and international hub at JFK and continuing to have flights out of both JFK and LGA
- Tremendous international reach out of JFK
- Great FL service out of NY area
- Potential of improved IFE from the DL side
- Potential of E+ throughout the fleet over time from the UA side
- Hopefully domination of MP over Medallion, but in either case a likely preservation of GS (hopefully )
- Nice integration between RCC and CR.
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Old Feb 7, 2008, 5:20 am
  #60  
 
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A lot of interesting speculation on this thread.

I saw from first hand experience that when HP "merged" with US, we got the worse aspect of the two programs bennie by bennie.

HP had free drinks in their clubs, US didn't, free drinks went away.
US allowed top tiers to carry over all EQM's over 100K to the next year, HP didn't, went away.
US gave top tier valuable transatlantic upgrades, HP didn't, upgrades became impossible to use.
HP cleaned their aircraft, US didn't, they are all dirty now.
HP top tier at 75K, US 100K, now it takes 100K.

I could go on (and on), but you get the drift.

I left US after 22 years of loyalty and fly UA for E+ and SWU's and excellent saver award availability. If these go away, I will be looking for another carrier. At least it won't feel like a divorce this time as the marriage has been so short.
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