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Continental & United Merger supposedly more serious [Merged Threads]

 
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Old Feb 7, 2008, 4:42 pm
  #91  
 
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Originally Posted by iwebslinger
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.
I hope you are correct. It is time for some new leadership at United whom does not have a merger as the only viable business plan for the airline.
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Old Feb 7, 2008, 4:57 pm
  #92  
 
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Originally Posted by emma dog
3 cabin is here to stay on some routes. First, UA is still competing on flights to Asia and Australia, so 3 cabin is important... on the other hand, recent reports of F service/seat quality leaves one to wonder if they're serious. The second thing to remember: CO is making $ on 2 cabin 757's to Europe. I'm sure we're goign to see a realignment of flights... i.e. some mixed 2 and 3 cabin service kind of like what you see on UA transcons (but with true F service vs. what goes on if you fly transcon from SEA in a 767/777). Finally, any discussion about "all the money spent so far" on new seats doesn't hold much merit since the planes have not been updated yet and a merger can just cease the transformation.

Finally, earlier, I mention closing CLE, shrink DEN, and realign IAD and some naysayers brought up various issues including weather and aesthetics. Here's why:
Hubs at EWR ORD, and IAD are here to stay. CLE is in the center of these three airports. No need for international flights of any significance. Transfer the connecting pax to IAD if N/S, or ORD/DEN if E/W. CLE will go away like PIT, IND, RDU, and BNA.

DEN... will shrink and be used purely for some transcon transfers. Problem is that IAH and ORD do the exact same thing. The N/S west coast traffic is served pretty well with nonstops and/or the competition.

IAD... i see more international stuff being sent back to EWR if it does not have sufficient O&D traffic from IAD. Also, you may see consolidation of traffic that currently is transferring at EWR and IAD... possibly to be shifted to iad as a concession to relieve NYC airport traffic.
I agree with you on CLE closing, and IAD being realigned (when they realize that there's no "business" traffic other than government business, which doesn't pay the fares).

I disagree re DEN. I can't see a combined UA-CO being allowed to be the biggest game in town at both SFO and LAX. If I'm UA, I protect the SFO fortress; it's more lucrative on international travel, and it's already a hub so it's defendable. LAX, other than entertainment, is middle market. If UA agreed to limit its ops at LAX to T7-T8 plus reopening the old Express terminal for props & some RJs, then it would need DEN for both domestic connections and to battle the DL-NW SLC hub for Rocky Mountain region traffic.

Originally Posted by VA1379
There may not be enough demand for two carriers to offer E+ seating as a separate service section with people willing to pay extra for it. United has already made the capital investments to rearrange the seats and market E+. For a competitor to do the same thing, they have to be willing to accept the reduction in coach seats and invest the effort to market the product and train F/As to enforce seating rules. Other carriers may have decided that this is not worth the effort to imitate United if it means that they would need to order more aircraft to make up for the reduction in capacity.

United has one of the larger fleets around, and the capacity reduction has already been taken. They started E+ when they were still in bankruptcy and looking to reduce excess capacity. United had a lower opportunity cost for creating E+ than what a competing carrier would face because there is less excess domestic capacity now. Since United has already spent much of the initial costs related to E+, the profit from having an E+ section is much higher than it would be for other airlines.
There's far less capital involved in going to E+ than in going 3-class seating on CO's widebodies. If you look at the CO narrowbody fleet, you'll see that they can probably just pull a row from in front of the exit and create E+. Yes, it involves MX work, but not major capital issues.

Originally Posted by J.Edward
As for E+...not sure what to think about this one. I jumped over to UA from CO for this reason (and for liberal international upgrades)...but the future I see for E+ in the domestic market looks bleak. I hope a way is found to make it cost effective.

Likewise I am not sure if International First will play as large a component in the new entity. What I suspect will happen is that it will stay on routes where paid F demand, not upgrade demand, can justify its existence. Other routes would then find the F cabin replaced with a larger, and hopefully new, J cabin.

Not sure what will happen to PS...but like domestic E+ the future looks bleak to me...with the chances of a international style F cabin on the route looking even bleaker.
Originally Posted by TechBoy
I think this is right except that it will be by plane, not necessarily route. 747/777 will go to full 3 class and be used on major interational routes with customers that actually buy F. 767 will go to 2 class (like AA) but with lie flat seats and be used on shorter/thinner international routes that have little paid F (or for 3rd or 4th flights/day to major destinations). CO's international 757 will stay the same for very thin routes.

I agree that CLE will shrink, with most of the traffic going to IAD which has lots of extra capacity. While DEN might shrink a bit, I don't see it changing that much. IAH is no substitute as a hub as it is far away and much further south.

As for international traffic on the east coast, given the limits at EWR I could see the following system used for most routes:

1xday = 1 EWR
2xday = 1 EWR 1 IAD
3xday = 2 EWR 1 IAD
4xday = 2 EWR 2 IAD
5xday = 2 EWR 3 IAD
6xday = 2 EWR 4 IAD


Of course, this system would need to be adjusted based on actual O&D on a particular route. But it would deal with the capacity issues at EWR (and allow EWR to concentrate on NYC O&D) while also serving O&D at IAD well.
I agree with TechBoy that the solution is to conform the configurations by aircraft. But I think TechBoy is giving IAD too much potential TATL traffic; at best, 1x to any destination other than maybe LHR/FRA.

The 747s and 777s need the 3-class; CO has only 18 777s, so redoing them to UA's new international hard product shouldn't involve too much money or time.

CO has 10 762s; they could be redone to a PS-style, and used on LAX/SFO-EWR routes (maybe supplemented with some 777 repositioning flights) to keep the 3-class battle alive in that market.

CO has 16 764s. Some of them are in the Micronesia configuration of 20 BF/236 Y; most are 35 BF/200 Y. Reconfigure the entire fleet as 35/200, and use them exclusively to Hawaii. Send UA's 763-US configuration (34 F/210 Y) to Micronesia. 16 764s should be about right for handling the combined airline's operations from all the Hawaiian islands (including even the HNL-NRT flight): HNL from NRT, EWR, IAH, ORD, (either DEN or LAX) & SFO (1 or 2x each, depending); and 1x daily to each other city: OGG from EWR, IAH, ORD & SFO; KOA from SFO & ORD; LIH from SFO.

UA has a lot of 763s; they would continue to be redone in the WW2 configuration, and would form the backbone of the European fleet, ex-ORD/EWR/IAD and probably even IAH. They could also base in IAH for South America service.

The 752s in the CO configuration would go to Central America, from all the hubs. The PS 757s could be ferried to NRT for service from there, if it would enhance efficiency of turnarounds of the widebodies, or reconfigured.

All of the 733s and 735s from both parents would be retired/sold/returned in the short term (5-10 years). The A320 fleet would be de-Ted'ded. The 753s and A319s would be good for Florida/Vegas service, on dense and thin routes (respectively). The non-PS UA 752s, along with the 738s and standardized A320s would be the backbone of the domestic fleet.
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Old Feb 7, 2008, 5:13 pm
  #93  
 
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Originally Posted by CO FF
I agree with you on CLE closing, and IAD being realigned (when they realize that there's no "business" traffic other than government business, which doesn't pay the fares).
I doubt the former will happen and suspect, assuming consolidation occurs between CO and UA, IAD, EWR and ORD will have traffic realigned to catch more o/d traffic. CLE's not going anywhere with UA + CO.
Originally Posted by CO FF
There's far less capital involved in going to E+ than in going 3-class seating on CO's widebodies. If you look at the CO narrowbody fleet, you'll see that they can probably just pull a row from in front of the exit and create E+. Yes, it involves MX work, but not major capital issues.
No.
Originally Posted by CO FF
The 747s and 777s need the 3-class; CO has only 18 777s, so redoing them to UA's new international hard product shouldn't involve too much money or time.
..and chocolate milk will flow from the water-fountains!

But I suspect the answer will still be no.

Originally Posted by CO FF
CO has 10 762s; they could be redone to a PS-style, and used on LAX/SFO-EWR routes (maybe supplemented with some 777 repositioning flights) to keep the 3-class battle alive in that market.
No.

Originally Posted by CO FF
CO has 16 764s. Some of them are in the Micronesia configuration of 20 BF/236 Y; most are 35 BF/200 Y. Reconfigure the entire fleet as 35/200, and use them exclusively to Hawaii. Send UA's 763-US configuration (34 F/210 Y) to Micronesia.
No.
Originally Posted by CO FF
16 764s should be about right for handling the combined airline's operations from all the Hawaiian islands (including even the HNL-NRT flight): HNL from NRT, EWR, IAH, ORD, (either DEN or LAX) & SFO (1 or 2x each, depending); and 1x daily to each other city: OGG from EWR, IAH, ORD & SFO; KOA from SFO & ORD; LIH from SFO.
No.

Originally Posted by CO FF
UA has a lot of 763s; they would continue to be redone in the WW2 configuration, and would form the backbone of the European fleet, ex-ORD/EWR/IAD and probably even IAH. They could also base in IAH for South America service.
Hmmmmm....tough call.

Originally Posted by CO FF
The 752s in the CO configuration would go to Central America, from all the hubs. The PS 757s could be ferried to NRT for service from there, if it would enhance efficiency of turnarounds of the widebodies, or reconfigured.
Why would CO pull them off the European runs?

Originally Posted by CO FF
All of the 733s and 735s from both parents would be retired/sold/returned in the short term (5-10 years).
I think this too would happen, assuming no dramatic changes occur in the short term.
Originally Posted by CO FF
The A320 fleet would be de-Ted'ded.
Praise god! ^ ^ ^

lucky should consider arranging a party around this event!
Originally Posted by CO FF
The 753s and A319s would be good for Florida/Vegas service, on dense and thin routes (respectively). The non-PS UA 752s, along with the 738s and standardized A320s would be the backbone of the domestic fleet.
Well said! The 753's are one of the best weapons to use against LCCs and those leisure routes - and to that end Vegas and Florida come to mind. Not sure what will happen to the A320's configuration wise - hopefully they'll have the F cabin beefed up.
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Old Feb 7, 2008, 6:41 pm
  #94  
 
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As a new yorker, I have to admit I like the idea of a merger with CO (or DL) to increase the local flight options. I would hate to see them drop MP and the United brand in favor of CO's, does that really seem like that would happen? And what about my channel 9? I would hate to see that go. I wonder if CO would add it....
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Old Feb 7, 2008, 9:12 pm
  #95  
 
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Originally Posted by CO FF
I agree with you on CLE closing, and IAD being realigned (when they realize that there's no "business" traffic other than government business, which doesn't pay the fares).
I don't think that you understand the IAD market. Government is a very small part of the employment base these days -- about 300k federal employees in the region. DC is the richest metro area in the country, full of lawyers and consultants who buy lots of high fares. Granted, NY and LA have the most premium customers overall, but DC is easily #3.

Originally Posted by CO FF
There's far less capital involved in going to E+ than in going 3-class seating on CO's widebodies. If you look at the CO narrowbody fleet, you'll see that they can probably just pull a row from in front of the exit and create E+. Yes, it involves MX work, but not major capital issues.
Agree. E+ and CO's superior customer service would make for a great offering.

Originally Posted by CO FF
I agree with TechBoy that the solution is to conform the configurations by aircraft. But I think TechBoy is giving IAD too much potential TATL traffic; at best, 1x to any destination other than maybe LHR/FRA.
Disagree here. UA runs 4xLHR in the summer. Haven't checked recently, but IIRC CO doesn't serve any destination more than 2x from EWR and often with smaller planes than UA uses at IAD where almost all destinations get 777s. There's 7+ million people in the region.

Originally Posted by CO FF
CO has 16 764s. Some of them are in the Micronesia configuration of 20 BF/236 Y; most are 35 BF/200 Y. Reconfigure the entire fleet as 35/200, and use them exclusively to Hawaii. Send UA's 763-US configuration (34 F/210 Y) to Micronesia. 16 764s should be about right for handling the combined airline's operations from all the Hawaiian islands (including even the HNL-NRT flight): HNL from NRT, EWR, IAH, ORD, (either DEN or LAX) & SFO (1 or 2x each, depending); and 1x daily to each other city: OGG from EWR, IAH, ORD & SFO; KOA from SFO & ORD; LIH from SFO.
I think that you overestimate the importance of the Hawaii market. UA has proven, as the largest carrier to HI, that ordinary domestic configurations are the most profitable way to serve this market. There are very, very few premium fare customers in this market. Lots of upgraders and award tickets. So it doesn't make sense to use premium seats in widebodies in that market.

Originally Posted by CO FF
All of the 733s and 735s from both parents would be retired/sold/returned in the short term (5-10 years). The A320 fleet would be de-Ted'ded. The 753s and A319s would be good for Florida/Vegas service, on dense and thin routes (respectively). The non-PS UA 752s, along with the 738s and standardized A320s would be the backbone of the domestic fleet.
I agree with this and would expect that later on, the old 757s would be replaced by 739s and other narrowbodies by a newly designed fuel efficient model 2015 or later.
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Old Feb 7, 2008, 9:20 pm
  #96  
 
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Old Feb 7, 2008, 11:09 pm
  #97  
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The only good news here is that a UA/CO entity would have a greater chance of surviving in the current economic environment. And CO's management is far more competent than UA's (which I'll bet will parachute out ^ ).

The bad news: UA miles will become devalued or worthless if the Nonepass model is adopted. Even if it isn't, miles will be harder to use as CO elites inundate UA flights for award travel (since they can't get saver awards on CO). Wonder what will happen to mileage upgrades? Copay - NO WAY!
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Old Feb 7, 2008, 11:15 pm
  #98  
 
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Originally Posted by J.Edward

[QUOTE FROM CO FF, in post 92 above]

I doubt the former will happen and suspect, assuming consolidation occurs between CO and UA, IAD, EWR and ORD will have traffic realigned to catch more o/d traffic. CLE's not going anywhere with UA + CO.


[QUOTE FROM CO FF, in post 92 above]

No.
..and chocolate milk will flow from the water-fountains!

[QUOTE FROM CO FF, in post 92 above]

But I suspect the answer will still be no.

[QUOTE FROM CO FF, in post 92 above]

No.

[QUOTE FROM CO FF, in post 92 above]

No.

[QUOTE FROM CO FF, in post 92 above]

No.

[QUOTE FROM CO FF, in post 92 above]

Hmmmmm....tough call.

[QUOTE FROM CO FF, in post 92 above]

Why would CO pull them off the European runs?

[QUOTE FROM CO FF, in post 92 above]

I think this too would happen, assuming no dramatic changes occur in the short term.

[QUOTE FROM CO FF, in post 92 above]

Praise god! ^ ^ ^

lucky should consider arranging a party around this event!

[QUOTE FROM CO FF, in post 92 above]

Well said! The 753's are one of the best weapons to use against LCCs and those leisure routes - and to that end Vegas and Florida come to mind. Not sure what will happen to the A320's configuration wise - hopefully they'll have the F cabin beefed up.
Care to be a little more specific about why you disagree?
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Old Feb 7, 2008, 11:50 pm
  #99  
 
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In response to TechBoy's post 96 above, responding to my post 92:

Look at http://www.eclatconsulting.com/im_pd...us_markets.pdf for O&D traffic stats (it's about a year old, but the best I could find fast). The 3 DC airports were 18 (BWI), 22 (DCA) and 28 (IAD) on the list of top O&D markets. Given that BWI is dominated by WN, I challenge your theory re its high-fare potential. Given that DCA is limited in what it can handle, I don't see it as a long-haul site. And, from #28, IAD trails LAX, ORD, DEN, EWR, SFO and IAH on the O&D list -- so why NOT cut it back if CO/UA merge?

Also, check out those O&D stats. HNL #26 O&D, OGG #57, LIH #77, KOA #79, ITO #93. Even if a significant % of the total O&D is truly inter-island, rather than connecting to a mainland flight, an airline that is trying for as big a combined share as UA+CO would need a lot of seats in the market. 14*235/day is about 3300 seats (16 764s, minus 1 for NRT, minus 1 for MX at all times) out of the approximately 107,750 that currently serve those airports.

Plus, frequency of operations to diverse mainland airports can actually be very efficient. Now, redeyes from HNL to LAX/SFO leave between 9:30p and 11p, to arrive between 5am & 6:30am; a DEN n/s leaves at 11:15p to arrive 8ish; ORD n/s leave at 5:30p to arrive at 5:30a; EWR n/s leave at 10:30p and arrive 1:30p; IAH 8:30/10:30p to arrive at 8a/10a. What do the UA personnel do between the 5:30pm ORD flight and the 9:30pm California flights (answer: the people are contracted, so quality suffers)?

Imagine coordinating all those flights. Day flights to the west coast would leave California around 10am, in time for pax to arrive at hubs from early feeder flights, and arrive at 1pm (not too early for hotel checkin); afternoon flights from the west coast would leave around 3pm, arriving at 6pm. Day flights from the east/midwest would leave after the morning rush from those airports, arriving late afternoon. Eastbound, schedules could be coordinated to have flights leaving every 45 minutes or so from 6pm to 11pm, out of no more than 3 gates (EWR at 5:45p, ORD at 6:30, IAH at 7:30, ORD again at 8:15, EWR again at 8:30, SFO/LAX at 9:30/10 and SFO again at 11). It levels out the load on GAs, club staff, GAs, ramp, catering, etc. -- and by having the need for fewer connecting flights (which is how HA/AQ make their real money), it makes it harder for them to undercut fares with mainland service.
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Old Feb 8, 2008, 12:40 am
  #100  
 
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Originally Posted by fastair
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.
The unions would violate CBA's if they had gone on strike, and I wouldn't exactly equate the judicial branch with the legislative and executive.

A Passenger Bill of Rights is NOT meddling, it is protecting the taxpayers against greedy, poorly managed, stone-aged bureaucracies. The government has spared the industry of this out of pity because it would cause economic harm. Only NY has imposed one and the airlines sued unsuccessfully to block it because there is a public safety aspect. Being held on an airplane without food, water or bathroom...the detainees at Gitmo are treated better.

The FAA response to the explosion of RJ's and domestic travel has been poor, but airlines have done nothing to regulate themselves. It is like all the fish in the tank going for one little nibble meanwhile a seven course meal at Morton's is sinking into the fake coral on the other side. All of the airlines, except SouthWest (and to some extent Frontier, Jet Blue and Virgin America) have just copied each other on everything they do. There is not any planning or thought going into the long term or how to differentiate themselves from the pack.

In spite of your assertions, competition is still good. Competition is what has kept more money in your pocket and less in airlines pockets. If airlines don't have the intestinal fortitude to charge fares to break even with higher fuel prices, that is not an argument for consolidation, that is an obvious weakness of management and/or demand. The thing is, for the most part, demand is increasing and capacity is shrinking without consolidation because the airlines are finally starting to figure the game out a bit better.

I didn't say anything of the sort. The government has shown pity on the airlines and they shouldn't have. The airlines are falling on their own swords. If a few bleed to death in the field, that is fine, the fittest will survive. Also, there are two different discussions - deregulation and oversight of anti-trust issues. The government is still well within their rights to block any mergers on the latter on the basis that IT WILL (DEFINITELY) harm consumers. It would also harm consumers (and many local economies) if one of the major airlines went toes up, but that is how the pack stays strong.

HonestAbe is wrong. Glenn Tilton is taking United down this path for the shareholders. However, as demonstrated by UAUA, CAL, DAL and other airlines stocks doubling in the last few weeks after Delta invited suitors, these are all people in the stocks for short term gains. After the merger, they will take their profits and run and the airlines still will not have any market capitalization or cash floating around. Tilton has to dance for the shareholders, but to say this is the best thing for UAL and the people that keep the airline viable (employees and customers) is flat wrong. This has the potential to be a disaster. What if a merged entity of DL/NW or UA/CO go under? Then you could lose the #1 or #2 airline both domestically and in the world in one swoop (an unlikely scenario without consolidation). What HonestAbe does point out is that airlines are lousy stocks to hold long term. They don't appreciate and there is no ROI. The shareholders are in it for a fast buck. Consolidation won't fix that either. Successful execution of a successful strategy will change that but it will take a Long, LONG time. Airlines are not going to be desirable long-term play for anyone when they can buy Microsoft or commodities. Owning Microsoft you don't have to worry about a plane crashing and taking the airline out, or rising fuel prices, or multiple unions, or even competition. In airlines you do. There is a reason many airlines are either state owned or state subsidized. Economies depend on them, but they are not generally profitable...ever.
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Old Feb 8, 2008, 12:56 am
  #101  
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I am getting closer to MM status. Under a combined airline, the status would really not be worth as much!
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Old Feb 8, 2008, 7:32 am
  #102  
 
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Originally Posted by Seeksreal
There is no way that I would stay loyal to UA if this merger happens. CO is in my opinion the worst airline choice out there apart from Southwest. I would prefer no merger at all. Keep the competition up! That is what a market economy needs in order to function.
Did 75 K on CO last year after a two year break from Road Warriorism - Not happy with the changes from 2005 but still better than my recollections of my experiences over the last 20 years on Delta and/or United - NEVER ELITE ON EITHER -

This year has been exclusively on Southwest ONT/Sacramento/ONT - The new boarding process at SW has made it much less painfull to ride the "bus of the sky". You are assigned a number so you can relax and just walk up to your place in line when it's time to board (A Southwest boarding line used to never get longer, just wider) Managed to get A list qualified (WebSite Bug) So I do not have to sign on exactly 24 hours ahead to have the prospects of getting a decent shot a seat


Southwest from ONT

or a UAL or Delta CodeShare on a Barbie Jet from LAX ?

9 R/T's or 3 Per Day ?

Once you accept Southwest for what it is - Effiecient Profitable Here to Stay while the others want to expand themselves to "profitability"

Last edited by FC_Dave; Feb 8, 2008 at 7:36 am Reason: Typing in the dark
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Old Feb 8, 2008, 8:32 am
  #103  
 
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Originally Posted by joelfreak
Come on mainline ISP service!
Now you're talking!^
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Old Feb 8, 2008, 8:51 am
  #104  
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Originally Posted by CO FF
I agree with you on CLE closing, and IAD being realigned (when they realize that there's no "business" traffic other than government business, which doesn't pay the fares).
That is patently false, and one of the most absurd statements I have read on FT in a long time. IAD, and the DC area as a whole, generates a huge amount of paid premium traffic.
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Old Feb 8, 2008, 9:46 am
  #105  
 
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We'll see what happens...
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