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US/AA merger- MASTER DISCUSSION THREAD/incl 'when will US leave STAR'

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US/AA merger- MASTER DISCUSSION THREAD/incl 'when will US leave STAR'

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Old Dec 8, 13, 9:45 am   -   Wikipost
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There is an existing thread in the AA forum that may be useful to US and AA Flyertalkers:
US-AA Merger: Just the Facts thread

As facts become posted, that should be the place to look.

Merger discussion, speculation, and other questions can be directed here, or the similar thread in the AA forum:
MERGER: US and AA 9 Dec 2013 and implications for AA flyers (new)

AA - US Merger Agreement / Announcement / DOJ Action Discussion (consolidated, and now closed to new posts)
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Old Jun 19, 13, 3:39 pm
  #796  
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Originally Posted by 225 View Post
Sorry if this was posted somewhere else:

http://www.bloomberg.com/news/2013-0...-gao-says.html
The Commerce, Science and Transportationís aviation subcommittee hearing came a day after two Senators, Democrat Amy Klobuchar and Republican Mike Lee of Delta, wrote a letter urging U.S. regulators to consider the mergerís impacts on consumers.
I have corrected the piece in question.
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Old Jun 19, 13, 3:44 pm
  #797  
 
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Originally Posted by Biggie Fries View Post
In other news, researchers find sky is blue.
Ha, that made me laugh out loud...Seriously, way to go guys, way to get out ahead on that one...

Go Gators
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Old Jun 19, 13, 4:02 pm
  #798  
 
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PHL will definitely remain as a hub. I won't allow otherwise.
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Old Jun 19, 13, 4:07 pm
  #799  
 
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Originally Posted by fastflyer View Post
PHL I can see. But I cannot see CLT going away. For those of us in the Northeast doing a midcon transfer, it's the only alternative to ORD. I don't want to fly all the way to Miami to get to Columbus, Ohio for example.
I don't see PHL or CLT hubs being closed. Flight schedules will be optimized, most likely, but they should remain hubs.
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Old Jun 19, 13, 4:13 pm
  #800  
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Originally Posted by eponymous_coward View Post
I have corrected the piece in question.


Quite a surprise that Senators from MN and UT would write such a letter. I would guess that Senators from NY, GA, MI and perhaps WA will sign on before too long.
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Old Jun 19, 13, 9:26 pm
  #801  
 
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Isn't MSP (in MN) a major hub for DL? Isn't SLC (in UT) a minor hub for DL? Hmmmm?
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Old Jun 19, 13, 10:48 pm
  #802  
 
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If US/AA gives up on CLT, they basically cede the southeast to DL. MIA makes a lot of sense for flights to South America, but I just don't see de-hubbing CLT entirely. Maybe use JFK/MIA mostly for int'l gateways and PHL/CLT for mostly domestic connections. JFK and MIA are already enough of a mess--they don't need to feed more domestic traffic through them.
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Old Jun 19, 13, 11:47 pm
  #803  
 
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Never fear, this baseless and typical self serving GAO report, will simply be promoted right into the Government's huge circular file.
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Old Jun 20, 13, 12:11 am
  #804  
 
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PHL and CLT hubs for AA

I'm a US Airways employee and will give my 2 cents of the future US hubs. Doug Parker has insisted that all hubs are safe. Of course, we all know talk is cheap and promises are always broken. Just look at DL at their promise to keep all their hubs after DL/NW merger. Delta announced a few weeks ago they were eliminating MEM as a hub and CVG is on life support. MSP has shrunk somewhat but still hub functional. Let's also not forget what USair did to LAS and PIT. AA did to STL. Anyway, back to my point of discussion.........

CLT: This is USAirway's "golden child" crown jewel hub and most profitable hub for US. I seriously doubt new AA will do any significant changes for CLT. New AA will need to stay competitive with DL's ATL hub serving the mid-Atlantic and southeast markets that current AA lacks. There may be more seasonal adjustments made with Caribbean routes that will be handled at MIA hub. However, MIA is far south to make reasonable connecting routes on domestic flights within the southeast. Let's also not forgot that AA tried to establish a RDU hub years ago, but could not compete with USAir's CLT hub around the corner and Delta's ATL mega hub.

PHL: PHL will serve as connector hub for transatlantic flights feeding flights that come from small markets within the east coast (RIC, BUF, MDT, etc). Currently, if a passenger wanted to book an AA flight from BUF, SYR, ROC, PIT, etc going to Europe, then most flights will need to connect to ORD which is out of the way. PHL will serve and focus primarily on secondary European markets such as ATH, VCE, BCN, GLA, SNN, DUB, TLV etc with mostly connecting traffic. AA will keep JFK as is. AA is unable to to grow JFK anymore than what is now due to slot controls. JFK will be mostly O+D for the NYC area serving lucrative markets like LHR, CDG, HDN, etc. In a nutshell, JFK and PHL hubs will be modeled the same way United (Continental) have structured their east coast hubs. For United Airlines, EWR is becoming more O+D operation serving NYC base passenger base and IAD gets the connecting passenger transatlantic feed (it's profitable for NYC to be only O+D than connecting passenger traffic).

PHX: Only time will tell how PHX will play out in the merger. I believe PHX will stay as is for the time being as AA/US will want to see how it co-exist sandwiched between LAX and DFW after the merger dust settles. THe new AA could shift PHX flights with intra-west secondary west coast markets (RNO, GEG, BOI, SMF, ONT, SLC, etc). For many passengers, LAX is too far west to make west coast connections work. LAX has no more room to grow and AA is already needing more gate space. Geographically, DEN or SLC works better for intra-western western hub, but since DL dominates SLC and DEN is home to 3 big players (UA, WN, F9), would be difficult for AA to set up hub operation in DEN. PHX is the only alternative for AA with intra-west hub. Another advantage for PHX is the low cost gate leases, etc and I am sure the city of PHX will give the new AA incentives to keep PHX as a hub status. Furthermore, with AA's bankruptcy allows them to restructure cost. AA's cost structure will be lower than Southwests so AA can afford and compete effectively head to head with Southwest in PHX.
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Old Jun 20, 13, 6:25 am
  #805  
 
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http://www.charlotteobserver.com/201...uaranteed.html
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Old Jun 20, 13, 8:15 am
  #806  
 
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From link above,
ďMiami could be a better hub than Charlotte in the Southeast,Ē the GAO said.
Makes me glad the government isn't running an airline
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Old Jun 20, 13, 8:28 am
  #807  
 
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Originally Posted by kudzu View Post
From link above,


Makes me glad the government isn't running an airline
Because the best route from, say, ALB to AVL is clearly via south Florida
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Old Jun 20, 13, 10:25 am
  #808  
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Originally Posted by skyfly View Post
PHL: PHL will serve as connector hub for transatlantic flights feeding flights that come from small markets within the east coast (RIC, BUF, MDT, etc). Currently, if a passenger wanted to book an AA flight from BUF, SYR, ROC, PIT, etc going to Europe, then most flights will need to connect to ORD which is out of the way. PHL will serve and focus primarily on secondary European markets such as ATH, VCE, BCN, GLA, SNN, DUB, TLV etc with mostly connecting traffic. AA will keep JFK as is. AA is unable to to grow JFK anymore than what is now due to slot controls. JFK will be mostly O+D for the NYC area serving lucrative markets like LHR, CDG, HDN, etc. In a nutshell, JFK and PHL hubs will be modeled the same way United (Continental) have structured their east coast hubs. For United Airlines, EWR is becoming more O+D operation serving NYC base passenger base and IAD gets the connecting passenger transatlantic feed (it's profitable for NYC to be only O+D than connecting passenger traffic).
The bolded part is completely inaccurate.

AA acquired about a dozen slot pairs from B6 in exchange for some DCA slots and has been squatting on those slots ever since (waiting for its costs to get in line and for the arrival of the new 787s). This summer, AA has about 20 or more domestic departures from JFK to small-medium cities during the primetime 3pm-9pm timeframe that are destined for more international nonstops.

AA built the biggest terminal at JFK and it has gates that are gathering dust. AA faces no real capacity constraints at JFK with respect to new long-haul flights.

Originally Posted by skyfly View Post
PHX: Only time will tell how PHX will play out in the merger. I believe PHX will stay as is for the time being as AA/US will want to see how it co-exist sandwiched between LAX and DFW after the merger dust settles. THe new AA could shift PHX flights with intra-west secondary west coast markets (RNO, GEG, BOI, SMF, ONT, SLC, etc). For many passengers, LAX is too far west to make west coast connections work. LAX has no more room to grow and AA is already needing more gate space. Geographically, DEN or SLC works better for intra-western western hub, but since DL dominates SLC and DEN is home to 3 big players (UA, WN, F9), would be difficult for AA to set up hub operation in DEN. PHX is the only alternative for AA with intra-west hub. Another advantage for PHX is the low cost gate leases, etc and I am sure the city of PHX will give the new AA incentives to keep PHX as a hub status. Furthermore, with AA's bankruptcy allows them to restructure cost. AA's cost structure will be lower than Southwests so AA can afford and compete effectively head to head with Southwest in PHX.
Yes, AA has lowered its costs in Ch 11, but not as low as US' costs. America West had rock-bottom costs yet ceded about half of the local market to WN. Even after the merger with US, US continued to have the lowest costs (thanks to very low labor costs with pilots and FAs) and yet US has made no inroads against WN at PHX.

Now, US costs are going to rise dramatically (to match AA's higher costs) and now, magically, all of a sudden, the new AA will be able to "compete effectively head to head with Southwest in PHX?" That's a good one.

PHX is a huge O&D market - 8th largest domestic O&D airport - and will be an important part of the new AA, but it's over-served by 50-seaters flying long stage lengths. Look for some trimming.
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Old Jun 20, 13, 12:31 pm
  #809  
 
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Originally Posted by FWAAA View Post
The bolded part is completely inaccurate.

AA acquired about a dozen slot pairs from B6 in exchange for some DCA slots and has been squatting on those slots ever since (waiting for its costs to get in line and for the arrival of the new 787s). This summer, AA has about 20 or more domestic departures from JFK to small-medium cities during the primetime 3pm-9pm timeframe that are destined for more international nonstops.

AA built the biggest terminal at JFK and it has gates that are gathering dust. AA faces no real capacity constraints at JFK with respect to new long-haul flights.
If AA is serious about JFK, they need to put those slots to good use. I'm surprised no one has raised issue with AA squatting on slots. AA has sat on the sidelines while Delta and JetBlue expanded at JFK, basically squeezing AA out of the market.

Originally Posted by FWAAA View Post
Yes, AA has lowered its costs in Ch 11, but not as low as US' costs. America West had rock-bottom costs yet ceded about half of the local market to WN. Even after the merger with US, US continued to have the lowest costs (thanks to very low labor costs with pilots and FAs) and yet US has made no inroads against WN at PHX.

Now, US costs are going to rise dramatically (to match AA's higher costs) and now, magically, all of a sudden, the new AA will be able to "compete effectively head to head with Southwest in PHX?" That's a good one.

PHX is a huge O&D market - 8th largest domestic O&D airport - and will be an important part of the new AA, but it's over-served by 50-seaters flying long stage lengths. Look for some trimming.
Why would Parker merge with AA and then raise US costs? I would imagine he would want to lower AA's costs to match US lower costs.
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Old Jun 20, 13, 1:02 pm
  #810  
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Originally Posted by austin_res View Post
If AA is serious about JFK, they need to put those slots to good use. I'm surprised no one has raised issue with AA squatting on slots. AA has sat on the sidelines while Delta and JetBlue expanded at JFK, basically squeezing AA out of the market.
There are no procedures by which competitors can complain about the utilization of JFK slots - they are simply "use them or lose them." There aren't any "highest and best use" requirements.

AA has assembled some JFK slots while it waited for its competitors' labor costs to rise to AA's levels. Eventually, the AMR board overruled Arpey and filed a Ch 11 petition to forcibly lower AA's costs. Now that those costs have been lowered, AA has been expanding long-haul flights at JFK this spring. High-cost airlines tend to contract, and low-cost airlines tend to grow (generally at the expense of their higher-cost competitors). Sure, DL expanded - it had the benefit of bankruptcy-induced lower labor costs.

US is an odd example, as it's been a low-labor-cost airline that has not grown since the merger in 2005. In many ways, Parker squandered the huge labor savings forced on the US employees in their two bankruptcies. Once it became obvious that UA/LH/AC would not admit US to the immunized joint ventures, Parker should have acquired some TPAC-capable planes and expanded from PHL.

jetBlue is basically irrelevant as it does not fly from JFK to Asia, Europe or Deep South America. DL (at JFK) and UA (at EWR) are the relevant NYC-Longhaul competitors.

Originally Posted by austin_res View Post
Why would Parker merge with AA and then raise US costs? I would imagine he would want to lower AA's costs to match US lower costs.
That may be what Parker would want, but that doesn't line up to what he has promised his employees (both at US and AA).

The reality is that new AA has made promises to PMUS and PMAA employees that will increase its labor costs by about $400 million a year above the new Ch 11 labor costs of AA and the current labor costs at US, according to AA's Disclosure Statement. Most of that $400 million will go to the PMUS pilots and FAs.

That's one reason that some are predicting some shrinkage at CLT and PHX: those hubs have been profitable at the old, low labor costs prevailing at US. Not so sure they'll be as profitable at the new higher labor costs. Parker has for years told his employees that US could not afford to pay the same as AA, UA or DL, because the US hubs don't generate the same high revenues. CLT and PHX won't magically generate higher revenues now, and thus some right-sizing may be in their futures. For nearly 20 years, US has had the lowest yields to Europe, and that's because PHL and CLT don't generate the high yields found in NYC. Changing the name to AA won't change that.
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