The US/DL LGA slot swap [Master Thread]

 
Old Feb 10, 10, 1:53 pm
  #61  
 
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Originally Posted by chicagorich View Post
WN seems to be doing OK. Airtran is more or less profitable. Isn't Allegiant profitable as well.?

The problem isn't the airline business. It is the broken model that the legacy airlines persist in trying to use that is their downfall. The government should not be perpetuating that model.

.
You're comparing apples to oranges...Point to point airlines have much lower costs than hub and spoke carriers. Try flying from Yuma to Akron on WN. Can't be done because WN only operates in highly profitable markets. They cherry pick routes so to speak. It's a good model and it works well for them but you can't have everybody doing that...you need the service to smaller markets as well.
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Old Feb 10, 10, 2:02 pm
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Originally Posted by gaucho99 View Post
You're comparing apples to oranges...Point to point airlines have much lower costs than hub and spoke carriers. Try flying from Yuma to Akron on WN. Can't be done because WN only operates in highly profitable markets. They cherry pick routes so to speak. It's a good model and it works well for them but you can't have everybody doing that...you need the service to smaller markets as well.
WN carried more pax than the combined DL/NW in 2008. It's hard to say they are cherry picking. They are flying where people want to go.

Are you suggesting that the legacy airlines are flying to airports with less demand and suffering the associated financial losses out of a sense of public service..?

.
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Old Feb 10, 10, 2:07 pm
  #63  
 
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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.
Much like your post that I replied to said that US needs all those LGA-PHL flights to connect passengers from a major market to the PHL hub and US' network...

Jim
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Old Feb 10, 10, 3:02 pm
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Originally Posted by gaucho99 View Post
You're comparing apples to oranges...Point to point airlines have much lower costs than hub and spoke carriers. Try flying from Yuma to Akron on WN. Can't be done because WN only operates in highly profitable markets. They cherry pick routes so to speak. It's a good model and it works well for them but you can't have everybody doing that...you need the service to smaller markets as well.
Who needs the smaller market service? While it would suck, people living in Yuma can drive to SAN or PHX if they need a flight. Or they can pay a premium to fly from YUM to PHX and then onward to their destination.

If an airline cannot be profitable overall (I realize some money losing routes can be subsidized by routes that make money) then they should eliminate routes that are a drag on their profitability first. If that means abandoning small markets, so be it.

When I lived in GNV, my only choices were DL and US after CO pulled their TPA codeshares. Or I could drive to MCO, TPA, or JAX and usually pay half the amount it would have cost me to fly out of GNV.

Sometimes time was more important, so I paid up. Others it wasn't, so I made the drive to save hundreds of dollars. If no airlines served GNV, I'd just have to plan my travels accordingly to account for time lost in my car heading to JAX or MCO.

It's just so odd to me that a business model that focuses on "highly profitable routes" is viewed in a negative light. Isn't that the way businesses should be run?
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Old Feb 10, 10, 7:44 pm
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Originally Posted by BoeingBoy View Post
Much like your post that I replied to said that US needs all those LGA-PHL flights to connect passengers from a major market to the PHL hub and US' network...

Jim
My post did not, in fact, say that. Feel free to reread:

Originally Posted by T/BE20/G
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.
Nowhere in the post did I make any comment as to how many flights were needed to connect NYC to the PHL hub. All I said was that LGA-PHL flights are needed for US to serve the NYC market through the PHL hub, even if the hub is reasonably close. I made no mention of how many flights they needed, nor of what aircraft types they should use; I simply defended my position that the market is not best left to Amtrak.
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Old Feb 10, 10, 8:18 pm
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Originally Posted by iahphx View Post
Yeah, that's just brilliant. I suspect many of the 32,000 people who draw their paychecks from US might disagree.

I often find your comments offensive, but this may be the most disgusting sentiment you've ever expressed. I would suggest an apology.

The demise of HP and US would have been a completely random act of bad luck brought on by international terrorists. HP was simply between financing when the terrorists destroyed the World Trade Center. The credit markets were frozen, and the folks who were going to routinely loan money to HP walked away. The gov't stepped in with a short term loan (at usurious rates) which US paid back early and then netted the gov't millions of dollars in profit from the sale of the warrants.

This put America West in position to then buy the failing US Airways, saving tens of thousands of jobs and maintaining another successful global airline competitor.

Frankly, saying this was all a mistake is simply misguided and downright mean. It's outrageously inconsiderate and stupid.
I was an America West pilot at the time and I happen to agree with Clue.

Had the government not loaned money to the weak sisters they would have vacated the field leaving only the stronger carriers. If my employer was destined to fail sooner was better than later. I would much rather had there been strong carriers with which to apply in 2002 rather than the field of walking wounded that populate the spectrum today.
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Old Feb 10, 10, 8:33 pm
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Originally Posted by flg8rmatt View Post
Who needs the smaller market service? While it would suck, people living in Yuma can drive to SAN or PHX if they need a flight. Or they can pay a premium to fly from YUM to PHX and then onward to their destination.

If an airline cannot be profitable overall (I realize some money losing routes can be subsidized by routes that make money) then they should eliminate routes that are a drag on their profitability first. If that means abandoning small markets, so be it.

When I lived in GNV, my only choices were DL and US after CO pulled their TPA codeshares. Or I could drive to MCO, TPA, or JAX and usually pay half the amount it would have cost me to fly out of GNV.

Sometimes time was more important, so I paid up. Others it wasn't, so I made the drive to save hundreds of dollars. If no airlines served GNV, I'd just have to plan my travels accordingly to account for time lost in my car heading to JAX or MCO.

It's just so odd to me that a business model that focuses on "highly profitable routes" is viewed in a negative light. Isn't that the way businesses should be run?
How is pointing out that LCCs can only serve higher volume markets viewing them in a "negative light?"

They do cherry-pick. Its a statement of fact, not a value judgement.

Although I can appreciate your "take-it-or-leave-it" attitude toward local air service, it is not that easy of a call for many who live or work in small or mid size communities across the country. Sure, if the legacies disappeared, LCCs would take up SOME of the slack. But as has been shown several times, it is very difficult (I won't say impossible, but it is close) to turn a profit as a LCC with anything smaller than a jet in the 100 seat category. This floor on aircraft size would keep many, many communities from getting any sort of reasonable air access, especially those in more remote areas.

In some areas, people could do like you, and just drive. But that won't work real well in Fargo, or Billings, or Grand Junction. You are looking at many cities that simply would not have access, which could have seriously negative economic consequences.

As far as the legacy carriers' ability to be profitable, some of their woes are their own fault, some come from regulation-era baggage that they still can't completely shed, and some are simply structural.

It does not help, however, that their most profitable routes are the ones that the LCCs tend to pounce on. Again, this is not a criticism of the LCCs - they do what they have to do as they should. It's just a statement of fact of how it works. NK is not bringing its lovely low fares to the DFW-Waco market.
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Old Feb 10, 10, 8:46 pm
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Originally Posted by able View Post
I was an America West pilot at the time and I happen to agree with Clue.

Had the government not loaned money to the weak sisters they would have vacated the field leaving only the stronger carriers. If my employer was destined to fail sooner was better than later. I would much rather had there been strong carriers with which to apply in 2002 rather than the field of walking wounded that populate the spectrum today.
Unfortunately, airlines have become political hot potatos. It would appear that the political consequences of a true liquidation have become too high, and frankly, I don't think the gov't has any particular interest in a "healthy" airline industry. I think they basically just want to be able to promote "low fares," keep air travel reasonably safe, keep the tax money flowing, pretend they are deterring ter'ists, and keep enough jobs so that the natives don't get cranky with their elected congresscritters.

If there are too many airlines chasing too little (profitable) revenue, well, that's too bad. Overcapacity means low fares, which is the name of the game.
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Old Feb 10, 10, 9:29 pm
  #69  
 
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Originally Posted by DoubleHaul View Post
. Sure, if the legacies disappeared, LCCs would take up SOME of the slack.
I see a problem in your statement, and perhaps you didn't mean it as I am about to interpret it, so take what I am going to say with a grain of salt....

The legacies won't disappear. Not all of them. If US and UA vanished, CO might move into small towns like Billings and Bismarck and Sioux Falls. I wouldn't expect WN or B6 to follow.

If ALL the legacies disappeared, I would agree with your sentiment. But there is room in the market for the legacies. Is there room for all of them? I don't know. But fewer legacies would equal fewer seats which would equal higher fares which could translate into bigger profits. That outcome might not benefit consumers the most, but if that is what the market should bring to bear, then so be it.
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Old Feb 10, 10, 9:54 pm
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Originally Posted by flg8rmatt View Post
I see a problem in your statement, and perhaps you didn't mean it as I am about to interpret it, so take what I am going to say with a grain of salt....

The legacies won't disappear. Not all of them. If US and UA vanished, CO might move into small towns like Billings and Bismarck and Sioux Falls. I wouldn't expect WN or B6 to follow.

If ALL the legacies disappeared, I would agree with your sentiment. But there is room in the market for the legacies. Is there room for all of them? I don't know. But fewer legacies would equal fewer seats which would equal higher fares which could translate into bigger profits. That outcome might not benefit consumers the most, but if that is what the market should bring to bear, then so be it.
No, you have a good point and I apologize. I ended up using my reply to you as a bit of a vent to those that seem to think that the legacies have nothing to offer and that LCCs are all we need. I guess I threw some unnecessary hyperbole in there.

You are correct that as long as there are a few healthy legacies around that the most critical service vacuums will be filled - some sooner, some later.

As someone who does not currently have any skins in the game, but who is obsessed with this maddening industry nontheless, I can see value in what both the legacies and the LCCs provide. I just wish that there was some way where they could both have a healthy existence!

(And on the original topic post, I still don't think that allowing the slot swap to go through as proposed would have much, if any, negative impact on competition, and I think that the DOT is flexing its muscles because it can, or maybe just to show how it is "committed to lowering fares" or something).
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Old Feb 10, 10, 10:36 pm
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Originally Posted by DoubleHaul View Post
(And on the original topic post, I still don't think that allowing the slot swap to go through as proposed would have much, if any, negative impact on competition
But more than an equivalent deal (swapping facilities instead of slots) would have at a non-slot restricted airport.

One needs to ask why US and DL want this deal. Because it gives them more influence at airports that already have constraints on competition. That equals more revenue - if US or DL thought they could get more revenue without this deal we wouldn't be talking about it.

It's the pre-existing constraints on competition that causes the government to impose conditions that at will at least foster more competition, even if not as much as letting anyone fly into DCA/LGA as many times a day as they want.

Take PHL, remove WN/F9 from the picture and limit FL and others to operating only a few flights/day. What would happen to fares? Obviously they'd be higher. That's what US and DL want to accomplish at DCA/LGA - the government preventing any more competition with the slot controls while they enjoy the advantage of having about half the available flights (US nearly 60% at DCA).

Jim
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Old Feb 10, 10, 10:47 pm
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Originally Posted by BoeingBoy View Post
But more than an equivalent deal (swapping facilities instead of slots) would have at a non-slot restricted airport.

One needs to ask why US and DL want this deal. Because it gives them more influence at airports that already have constraints on competition. That equals more revenue - if US or DL thought they could get more revenue without this deal we wouldn't be talking about it.

It's the pre-existing constraints on competition that causes the government to impose conditions that at will at least foster more competition, even if not as much as letting anyone fly into DCA/LGA as many times a day as they want.

Take PHL, remove WN/F9 from the picture and limit FL and others to operating only a few flights/day. What would happen to fares? Obviously they'd be higher. That's what US and DL want to accomplish at DCA/LGA - the government preventing any more competition with the slot controls while they enjoy the advantage of having about half the available flights (US nearly 60% at DCA).

Jim
eloquently put...
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Old Feb 11, 10, 9:10 am
  #73  
 
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Originally Posted by BoeingBoy View Post
But more than an equivalent deal (swapping facilities instead of slots) would have at a non-slot restricted airport.

One needs to ask why US and DL want this deal. Because it gives them more influence at airports that already have constraints on competition. That equals more revenue - if US or DL thought they could get more revenue without this deal we wouldn't be talking about it.

It's the pre-existing constraints on competition that causes the government to impose conditions that at will at least foster more competition, even if not as much as letting anyone fly into DCA/LGA as many times a day as they want.

Take PHL, remove WN/F9 from the picture and limit FL and others to operating only a few flights/day. What would happen to fares? Obviously they'd be higher. That's what US and DL want to accomplish at DCA/LGA - the government preventing any more competition with the slot controls while they enjoy the advantage of having about half the available flights (US nearly 60% at DCA).

Jim
Hi neighbor! (I'm in HP, too).

US and DL obviously want to consolidate and strengthen their operations at the airports where they have a strategic advantage.

Neither carrier is currently a price leader (despite US trying to convince us that it is some sort of LCC), so the effect on fares would likely be minimal. They may go up on average in some markets, but there is just as good a chance that some would see average decreases...not to mention the fact that the benefit to cities that would get new nonstop service to DCA/LGA is difficult to quantify in an argument where average fares are the only measure of consumer benefit.

This has nothing to do with Southwest, AirTran, jetBlue, Spirit, or anyone else. DOT is just inserting them into the equation so that it can be seen as fighting for "low fares" for the consumer - even if those low fares will largely, if not exclusively, be in nonstop and connecting markets that already have LCC competition. (And this is especially true if you consider all the metro-area airports in NYC and WAS as one market).

The fact of the matter is that the slot controls at DCA and LGA are artificial constraints. If the powers that be decided, then slots could be created with the stroke of a pen and bestowed upon any favored carrier (I am pretty sure that this is what happened at JFK when jetBlue started up). To take this one step further, slots could be abolished without the world ending. Sure, delays would increase, but at some point the balance between delays and service levels would be reached. I get a kick out of the complaints of how LGA is so delay prone and congested. Its like the old saying "Nobody goes there anymore...its too crowded!"

I don't think US/DL will agree to the DOTs conditions, so the deal is probably dead. The status quo is probably less damaging than completing the swap and allowing significantly more LCC service into the market.

I wonder if AA, UA, and CO are freaking out over this. They could actually get the real short end of the stick if it went forward - a stronger DL at LGA and US at DCA, plus more LCC competition at those airports!
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Old Feb 11, 10, 9:34 am
  #74  
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Originally Posted by able View Post
I was an America West pilot at the time and I happen to agree with Clue.

Had the government not loaned money to the weak sisters they would have vacated the field leaving only the stronger carriers. If my employer was destined to fail sooner was better than later. I would much rather had there been strong carriers with which to apply in 2002 rather than the field of walking wounded that populate the spectrum today.
If you were STILL working for US, you'd probably feel differently.

Look, it would have been insane -- and horrible public policy -- to force a major American airline to liquidate solely because of the 9/11 attack. I mean, honestly, isn't that just evil? The Air Transportation Stabilization Board was a good idea. They were pretty tough (maybe too tough) in doling out gov't money -- which is probably why they made A PROFIT (a large one) for taxpayers.

Indeed, the ATSB allowed SMART airline managers to come in and save troubled airlines. Let's see now, who went Chap. 11 after 9/11? Why, it was most of the BIG airlines like DL, UA and NW (I presume your "stronger" ones?), while a supposedly weak carrier (like HP) avoided bankruptcy and made money for their shareholders, creditors and the gov't!! And then they took their smarts and saved US, which nobody thought had a snowball's chance in hell to survive. And you call that a MISTAKE? I mean, seriously, where are you coming from?

The people who want to attack this airline should understand a bit of its history. It's truly a story of survival against all odds. And the final chapters have not yet been written.
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Old Feb 11, 10, 10:44 am
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Originally Posted by iahphx View Post
If you were STILL working for US, you'd probably feel differently.
I am, in fact, still working at USAirways. If they fail now I will be far worse off than if they had failed in 2001.

Look, it would have been insane -- and horrible public policy -- to force a major American airline to liquidate solely because of the 9/11 attack.
Now you are being disingenuous, at best. 9/11 was not the only reason any of the ATSB recipients were on the ropes. They were all at the precipice. No airline was being "forced" into liquidation, they had arrived at that juncture on their own.
I mean, honestly, isn't that just evil?
No. Keeping the stragglers alive only serves to weaken the rest of the field.

The Air Transportation Stabilization Board was a good idea. They were pretty tough (maybe too tough) in doling out gov't money.
Incorrect, they were not tough enough. They should have only provided funds to those carriers who could prove beyond a shadow of a doubt that 9/11 was the primary cause of their financial distress.

It would have been a far better idea to reduce the onerous tax burden that all airlines are saddled with and let the weakest players die rather than distorting the market with taxpayer money.

Indeed, the ATSB allowed SMART airline managers to come in and save troubled airlines. Let's see now, who went Chap. 11 after 9/11? Why, it was most of the BIG airlines like DL, UA and NW (I presume your "stronger" ones?), while a supposedly weak carrier (like HP) avoided bankruptcy and made money for their shareholders, creditors and the gov't!! And then they took their smarts and saved US, which nobody thought had a snowball's chance in hell to survive. And you call that a MISTAKE? I mean, seriously, where are you coming from?
DL, UA and NW did go through chapter 11 and emerged on the other side as viable businesses sans a public handout. Trumpeting the fact that USAir did not have to go through chapter 11 (for a third time) after they were beneficiaries of a public bail-out does not help your case.

The people who want to attack this airline should understand a bit of its history. It's truly a story of survival against all odds.
When that survival is courtesy of the U.S. taxpayer it is not nearly as inspirational as you seem to believe.

You must be in awe of the heros at AIG and Goldman Sachs. Truly epic tales of survival against all odds.

By your metrics the real SMART MANAGERS should be the executives at American. Not only have they survived without a trip through bankruptcy court they have done so while competing with carriers that went through both chapter 11 transformations and received bail-outs.

Ask them how they feel about having to compete with companies kept alive by tax dollars.

And the final chapters have not yet been written.
Is USAirways your religion or something?

Last edited by able; Feb 11, 10 at 11:05 am
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