The US/DL LGA slot swap [Master Thread]

 
Old Feb 10, 10, 8:20 am
  #46  
 
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Originally Posted by GaryZ View Post
I think some on this board must be living in a bubble - times are not that good for many American business, especially the airline biz. Clearly it's time for the gov. to back off and let the struggling airline folks make a few bucks...or would a GM-like bailout be a better alternative? This one is a no brainer.
The best alternative has happened.

HP and US have no room to cry about the "government backing off." None. The current entity only exists because the feds meddled.

I agree with you to a certain extent--what I'd really like to see happen is the feds auction off all slots at places like LGA and DCA to the highest bidder and let the market really work. Alas, the incumbents would scream bloody murder. They only want to be able to swap them among "the club."
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Old Feb 10, 10, 9:08 am
  #47  
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Originally Posted by vincentvan View Post
Pound for pound, I think Allegiant might be the most profitable of the bunch in recent times.
I respect Allegiant a great deal for the business they run, but I believe it is more accurate to call them a vacation services company that happens to operate a fleet of airplanes as a part of that business. I don't think they can be reasonably "bunched" with most other airlines that provide at least daily service on a vast majority of the routes they serve (something Allegiant does not do).
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Old Feb 10, 10, 9:12 am
  #48  
 
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Originally Posted by flg8rmatt View Post
Therefore, the government has a responsibility to the PEOPLE, not to business... The fact is, any business with profit as their end goal, is not going to make consumer friendly decisions out of the kindness of their corporate hearts.
Spoken like a true Marxist, err, socialist...

Originally Posted by ClueByFour
The current entity only exists because the feds meddled.
Perhaps, but that was another time and another economic reality. If you want to punish them, wait until they generate some cash, and then tax the crap out of 'em.
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Old Feb 10, 10, 9:17 am
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The dirty little secret is that if Southwest gets their hands on a dozen more slots at LGA and aitran (or whomever) gets them at DCA, it'll cause fares to go down.
There seems to be a common thought on this thread that lower fares are good for consumers. At this point that couldn’t be further from the truth.
10 years from now and a few more legacy’s gone, just what kind of fares is SWA (or any airlines) going to have on monopoly markets?
The best thing for service and consumers would be rational fares with airlines making money consistently.
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Old Feb 10, 10, 9:39 am
  #50  
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Originally Posted by AggieNzona View Post
There seems to be a common thought on this thread that lower fares are good for consumers. At this point that couldn’t be further from the truth.
I think you're going to find that hundreds of millions of Americans believe that lower prices are in fact good for consumers.

Originally Posted by AggieNzona View Post
10 years from now and a few more legacy’s gone, just what kind of fares is SWA (or any airlines) going to have on monopoly markets?
The best thing for service and consumers would be rational fares with airlines making money consistently.
You'd think that if WN were going to gouge travelers, they'd already be doing it in markets they own, wouldn't you? What is WN waiting for?

So if the legacies go out of business, there won't be any airlines to impose fare discipline? Nobody will start another jetBlue or Virgin America? All of a sudden, AirTran and Southwest and jetBlue and Spirit will gouge consumers unchecked by any competition? Count me as skeptical.

In my view, the best thing for frequent flyer elites would be legacy airlines making money consistently. For everyone else not obsessed with status and upgrades, low fares are what's best for consumers.
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Old Feb 10, 10, 9:45 am
  #51  
 
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Originally Posted by AggieNzona View Post
There seems to be a common thought on this thread that lower fares are good for consumers. At this point that couldn’t be further from the truth.
Only in the mind of people who do or have worked for an airline. Every other sane person understands that lower fares are better. If that kills a legacy or two, so be it.

Originally Posted by AggieNzona View Post
10 years from now and a few more legacy’s gone, just what kind of fares is SWA (or any airlines) going to have on monopoly markets?
Presumably something similar to what they do now.

Originally Posted by AggieNzona View Post
The best thing for service and consumers would be rational fares with airlines making money consistently.
HP did that at one time. Doug bought the East and abandoned the practice.
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Old Feb 10, 10, 10:11 am
  #52  
 
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Originally Posted by flg8rmatt View Post
First of all, no one said that. They said they didn't think the government had any business propping up failing industry, no matter what the reason. I completely agree. That doesn't mean I wish terrorists had finished off US. It means I wish economics would be allowed to take its course. Flying into DCA is not free-market competition because the slots are government controlled. Therefore, the government has a responsibility to the PEOPLE, not to business, to artificially create as close to a free-market situation as is possible.
If the government wanted to artificially create as close to a free market situation with slot controls, they'd let the airlines trade slots, no questions asked, no government approvals required.

New competition? To use BHM as a random example, if right now your choices are BHM-ATL-DCA, BHM-CLT-DCA, BHM-EWR/IAH-DCA and the slot swap takes place, one carrier is gone (DL) replaced by US with BHM-DCA. How has competition increased? How has a new carrier entered the game? US was already flying between BHM and DCA with a connection. Did I miss something where US and DL pledged to use all of their new slots in perpetuity to create service between DCA/LGA and cities they do not currently serve in any capacity?
DL will NOT be gone if the slot swap goes forward. They are not abandoning the DCA market. One would still be able to fly BHM-ATL-DCA, as they always did, or the new US BHM-DCA service. It is a net gain in service.

And what if, after 4 months, DCA-BHM is a bust? Does it become yet another DCA-PHL flight?

The government doesn't need to back off anything. US and DL can still fly to these "smaller markets" they'd just have to cut some existing service to do so. If there is so much money to be made on these routes, one would think they'd be flying them already. The fact is, any business with profit as their end goal, is not going to make consumer friendly decisions out of the kindness of their corporate hearts. While the consumer may win in terms of increased service to different cities, the consumer will lose with increased fares to get there.

Ask most people if they'd prefer to spend $300 to fly BHM-CLT-DCA or $500 to fly BHM-DCA, and I suspect most people and small businesses would "suffer" the connection to save money.
Most passengers prefer nonstops and are willing to pay more for them. Time is money.

You neglect the concept of flow - after the swap, US can offer a BHM-DCA nonstop because BHM passengers will be able to connect onward from DCA. Right now, nobody has sufficient feed to operate true hubs at LGA or DCA - and compete with CO's hub monopoly in the NYC market at LGA or UA's hub monopoly in the WAS market at IAD. Right now, CO gouges NYC-based customers on non-stops to small and mid-sized cities no that other airline has the connecting feed to offer multiple daily flights in the NYC market. The deal would increase competition in the WAS and NYC markets, not decrease it. The DOT simply has the relevant markets wrong - LGA and DCA aren't stand-alone airports with no alternatives that drive down fares.

Forcing the airlines to sell slots to LCCs who generally do not serve smaller and mid-sized markets won't help fares much. A 50th flight to large cities like Chicago, New York, Baltimore/Washington or some leisure destination in Florida won't lower fares much.
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Old Feb 10, 10, 10:30 am
  #53  
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Originally Posted by longtime lurker View Post

You neglect the concept of flow - after the swap, US can offer a BHM-DCA nonstop because BHM passengers will be able to connect onward from DCA. Right now, nobody has sufficient feed to operate true hubs at LGA or DCA - and compete with CO's hub monopoly in the NYC market at LGA or UA's hub monopoly in the WAS market at IAD.
You make some excellent points but I'm not convinced that it's in anyone's interest for an airline to operate a true connecting hub at LGA or DCA. Both are slot controlled and both are high-demand O&D airports. The airspace around them is among the most crowded in the country. Wouldn't it be better for both airports to feature nonstop flights to the key business markets instead of attempting to connect small towns to leisure destinations like Florida? Connecting traffic should be shunted thru JFK and IAD, not encouraged at LGA and DCA.
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Old Feb 10, 10, 10:54 am
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Originally Posted by sfozrhfco View Post
Instead they squat on their slots flying 10 round trips a day between LGA and PHL--a route far better served by Amtrak.
This sort of comment pops up often when discussing (very) short flights, but how do you propose that USAirways, with its primary international gateway in PHL, serve NY customers if they don't fly them to the hub? Do you really expect the airline to tell someone who calls up to book NYC-OSL that they should book Amtrak to Philly, use the local train to get to PHL, and then just book PHL-OSL with US? These flights are not primarily there to serve the local market; they are there to get passengers from a major market to the airline's hub and into the network.
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Old Feb 10, 10, 11:23 am
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Originally Posted by T/BE20/G View Post
they are there to get passengers from a major market to the airline's hub and into the network.
Yeah - 22 flights per weekday on primarily Dash-8's and CRJ 200's. That's almost a flight every 30 minutes on average, adding to the congestion both at LGA and in the airspace around NYC (not to mention adding to the congestion at PHL).

Do you think that US could use larger equipment and cut down the number of flights while still getting passengers "from a major market to the airline's hub and into the network?"

Jim
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Old Feb 10, 10, 12:17 pm
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Originally Posted by BoeingBoy View Post
Yeah - 22 flights per weekday on primarily Dash-8's and CRJ 200's. That's almost a flight every 30 minutes on average, adding to the congestion both at LGA and in the airspace around NYC (not to mention adding to the congestion at PHL).

Do you think that US could use larger equipment and cut down the number of flights while still getting passengers "from a major market to the airline's hub and into the network?"

Jim
Of course they could, but that doesn't mean that LGA-PHL is a market better left to Amtrak, as the post I replied to said. Of course, that's irrelevant to this discussion, as USAirways isn't claiming that they would love to be able to fly to other places from LGA if only they had the slots.

Additionally, these flights don't really "add" to the congestion at LGA... if they weren't flown, the slots would still be used for other flights, whether by US or by some other carrier, and the level of flying and level of congestion would be the same.
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Old Feb 10, 10, 12:30 pm
  #57  
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Originally Posted by radiotvlaw View Post
Ditto Clue's comments - the FCC regularly auctions spectrum (the late 90's auction of spectrum is widely credited with creating that long gone federal surplus at turn of the century) - It is a market driven process with plenty of anti-collusion safeguards in place. A good idea for slots - but, the short term downside is the "winner" needing to recapture their purchase price from pax fares - maybe, like the FCC does, restrict the total number you can acquire in one "market" to ensure there is a diversity of carriers (which should in turn create price competition).
Airlines are not radios. We need multiple airlines serving multiple markets, not 10 "new entrant" airlines serving NYC-Chicago as DOT seems to believe. The amount of analysis done by DOT on this is not persuasive.
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Old Feb 10, 10, 12:32 pm
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Originally Posted by T/BE20/G View Post
Of course they could, but that doesn't mean that LGA-PHL is a market better left to Amtrak, as the post I replied to said. Of course, that's irrelevant to this discussion, as USAirways isn't claiming that they would love to be able to fly to other places from LGA if only they had the slots.

Additionally, these flights don't really "add" to the congestion at LGA... if they weren't flown, the slots would still be used for other flights, whether by US or by some other carrier, and the level of flying and level of congestion would be the same.
Really? You don't think hourly 319/320 service would connect the PHL hub to NYC? People wouldn't be willing to wait an extra 20 minutes to get on a bigger plane? Honestly, I think US would be more successful on LGA-PHL (meaning increased traffic) if they ran 319/320s 10x per day instead of 22 Dash8/CRJs. I've done the flight a number of times, and every single time heard people comment "Wow, this is the smallest plane I've ever been on." Riding the horridly uncomfortable Dash8/CRJ certainly makes me want to use Amtrak instead, even if it costs me time.
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Old Feb 10, 10, 12:36 pm
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Originally Posted by GaryZ View Post
Spoken like a true Marxist, err, socialist...
Or a realist.

The government, through slot controls, created a closed market. Therefore, the government needs to artificially impose conditions on the market that will result in a trend towards free market tendencies. Allowing two carriers to circumvent these controls (through a swap) is not good.

Does anyone think that if US had been successful in their attempt to buy DL, they would have been permitted to keep all the slots at DCA and LGA post-merger? If not, then why should a swap be allowed either?
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Old Feb 10, 10, 1:26 pm
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Originally Posted by adstockton View Post
Really? You don't think hourly 319/320 service would connect the PHL hub to NYC? People wouldn't be willing to wait an extra 20 minutes to get on a bigger plane? Honestly, I think US would be more successful on LGA-PHL (meaning increased traffic) if they ran 319/320s 10x per day instead of 22 Dash8/CRJs. I've done the flight a number of times, and every single time heard people comment "Wow, this is the smallest plane I've ever been on." Riding the horridly uncomfortable Dash8/CRJ certainly makes me want to use Amtrak instead, even if it costs me time.
I'm sorry... could you point out where I said that 319/320 service couldn't connect PHL and NYC? What I said, in fact, was that of course fewer flights on mainline planes could be used, but it's irrelevant to this discussion.

The initial comment I responded to was that LGA-PHL is "a route far better served by Amtrak." Note that it was not that the route could be better served by mainline; therefore, my counter to the comment had nothing to do with whether mainline was a better choice, as this was not the issue in question. My response was counter to the suggestion that Amtrak should be the only carrier bringing people between LGA and PHL, and I stand by that, without regard as to whether US should be serving the market with mainline or express... My point was simply that US should be in that market.

Beyond that, the original issue was that US is wasting the slots by flying small planes in markets like LGA-PHL, when they could be using larger airplanes and serving additional communities with the slots that would be freed up. The problem is, US didn't say they wanted to add service to other markets from LGA; rather, US wants to add service to new communities from DCA. They could cancel LGA-PHL altogether, and the freed up slots would not help them add new destinations from DCA.

A later issue that was raised was that the frequent small plane service LGA-PHL adds to congestion. This is also a false argument, because it assumes that if the service were upgraded to mainline, then the slots that would be freed up would sit unused, lessening congestion. Of course, I think we all know that if LGA-PHL were upgauged to mainline, then the freed up slots would be used by someone to increase service to other/new markets.
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