what would aa/us merger mean for other OW carriers in WAS market?

Discussion in 'oneworld' started by jfhscott, Apr 20, 2012.  |  Print Topic

  1. jfhscott
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    jfhscott Silver Member

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    I'm fairly excited at the prospect of an AA/US merger, and I assume that the resulting airline would be a OW partner.

    Washington is pretty *A dominated. AA has a bunch of slots at DCA, although it has been downguaging to their legagy hublets, like BNA, STL, and RDU, and US has heaps. BA has decent service at IAD for longhauls. But, generally, OW has apparently surrenderd to *A in the WAS market. To the extent (whatever that may be) that passengers are alliance loyal versus airline loyal, would a beefed up DCA presence encourage LAN, Iberia, JAL, Cathay, Finnair, and Malev (just kidding), to take IAD more seriously? I can only imagine that the impacts would be subtle and not prone to objective measure. The question really would be whether WAS would remain a *A realm.

    One possibility would be Iberia's return to IAD, others might include JAL 787 service to IAD, a LAN presence at IAD (UA EZE service having shifted from EZE to EWR) or (let me dream) BA's A319 all business service to DCA, with preclearance at SNN (DCA slot controls being an obvious issue).

    Just thinkin'.

    I can take someone sayin' I'm an idiot.
     
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  2. TheTravelAbstract

    TheTravelAbstract Silver Member

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    +1.

    After reading this post I think "giddy with excitement" is more appropriate.
     
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  3. Wandering Aramean
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    Wandering Aramean Gold Member

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    No international carrier is going to build a network based on connections/feed that requires passengers to move between IAD and DCA. Just not realistic.
     
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  4. DestinationDavid
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    Ditto.
     
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  5. mowogo
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    mowogo Gold Member

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    They would not be used for connecting, but US is building loyalty at DCA, and a higher pool of OW travelers in the DC metro area could alter the dynamics of making IAD attractive for OW international flights based on O/D traffic.
     
  6. desamo

    desamo Gold Member

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    Unless there's direct particle accelerators or something. :)

    In this space-time, no.
     
  7. jfhscott
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    jfhscott Silver Member

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    This is more what I had in mind - will a higher concentration of OW passengers, particularly elites, in and of itself, marginally induce more OW participation at IAD?
     
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  8. Seacarl
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    Seacarl Gold Member

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    While more elites helps somewhat, what really makes a route work is a combination of O/D traffic plus connecting traffic. OW doesn't offer much in the way of connection opportunities at IAD - mainly to hubs which likely already have non-stop international service.

    IAD works for *A because of UA's connections.

    If US shifts to OW then PHL and CLT become candidates for more OW service, and maybe LH drops CLT.

    While I expect US shift to OW is most likely path, it's at least theoretically possible that Doug Parker recognizes that *A is more powerful for him and attempts to remain in *A if he thinks he can get it past the anti-trust regulators - not clear how much of a factor they consider the global alliances.
     
  9. DestinationDavid
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    If there's one thing in this whole speculation game I'd be willing to bet actual money on, it's that if US and AA merge, the new entity will be in OW.
     
  10. General_Flyer
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    General_Flyer Gold Member

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    I really hate to see that happen though, especially with the UA/CO crap nowadays..
     
  11. Seacarl
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    Seacarl Gold Member

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    What I'd bet on is that Doug Parker does what makes him the most money. I'm not sure it's such a slam dunk that OW makes him more money than *A. OW is not strong in Asia, and really not even in Europe outside the U.K. *A might want two U.S. members. I have no insight into the regulators.
     
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  12. DestinationDavid
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    Sadly for Mr. Parker, the regulators are a bigger key in that decision than he might be. They aren't going to look at the consolidated American market and say to themselves, "Oh, we went from 6 major legacy carriers to 3 in such a short amount of time, 4 of which ended up in the same alliance. Seems solid to us." Just look to the LAN and TAM merger and how their alliances influenced what regulators had to say about that.

    Setting that aside, I'm not so sure *A is a better match for US after a merger. OW might be weak in Asia and weaker than *A in Europe, but you're not addressing the reverse. Would US really maximize profits when it's splitting connecting passengers within the US domestic market with UA/CO? I don't know the exact numbers, but I could see being the only American partner in OW as a better opportunity than the 2nd American partner in *A. *A might have a large number of partners, but in reality only a portion of its partners are major players in the airline industry. Are Egyptair, Blue1, LOT, etc really bringing that much more to the table? I doubt it.
     
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  13. JetsettingEric
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    JetsettingEric Silver Member

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    The loyal US flyers that fly out of DCA are loyal to US because they don't want to go to IAD. BA already flies to IAD.

    What I could see happening are tag flights out of DCA to Canada. Similar to how LAN used to fly EZE-SCL-JFK-YYZ, i can see YYZ service restored if they could move their 5th freedom rights to DCA. EZE-SCL-YYZ-DCA with US customs clearance in YYZ. If CX had the same flexibility (they already fly JFK-YVR), I could see HKG-YYZ-DCA working as well.
     
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  14. DestinationDavid
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    What are your thoughts on why the DC area is a better market than the much larger NYC market? If LAN didn't make the JFK-YYZ tag on work, what elements make DCA a better option?
     
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  15. General_Flyer
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    General_Flyer Gold Member

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    Selfishly saying, I'd prefer to have Star Alliance to One World. One World isn't exactly weak anymore in Asia since MH is joining the team, and so is BD, which also means their European network slightly expanded. But having AA move to Star would prove to be a devastating blow to OW since they won't have the majority of domestic US destinations filled with AA anymore.

    As far as profit is concerned, both US and AA have their own market share in the industry, so they aren't exactly splitting passengers with anyone with the exception of connecting pax on OW flights.

    Getting back to the regulators, yes this maybe a tough call and there's a good chance they won't go to Star Alliance. Would be a shame that US have to leave Star though..

    But for all concerned sides with the exception of both airlines, I think keeping US and AA separated is still a better solution.
     
  16. DestinationDavid
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    I don't follow you on the profit issue with US and AA. How does that address anything about how a combined US/AA would be splitting the *A connecting traffic within the USA vs. US/AA being the only domestic US partner in OW?

    The addition of MH is nice but is absolutely not the solution to OW's Asia issues. What OW really needs is access to the Chinese market, and they remain the only alliance without a Chinese carrier. CX/KA doesn't cut it. BD's addition is nice but also not exactly a massive bump at all Not to mention BA has been pretty open about their intention to convert many of those BD depatures into long haul destinations in Asia.
     
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  17. JetsettingEric
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    JetsettingEric Silver Member

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    First off - JFK isn't the preferred airport for Toronto-New York. LAN was competing with AC that had the best schedule to LGA and EWR. CO to EWR, DL to JFK and Porter from YTZ (ideal location) to EWR. 1x a day at non ideal business hours won't compete.

    YYZ-Washington is a different story. This route is dominated by Star carriers (UA, AC, possibly US). Porter flies to IAD (not ideal). Less competition, and flying to the ideal city center airport is why i think it has a shot.
     
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  18. General_Flyer
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    General_Flyer Gold Member

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    IMO, Star Alliance traffic is much larger than OW traffic. I understand what you are saying regarding the splitting of connecting traffic between *A partners, yet how big are the market for OW anyways at least for domestic connection?

    Besides if US/AA will leave OW, these passengers will still be flying, with the only exception that OW won't have a partner in the US. Therefore there may not be any large shifts in the market anyways, since these connecting passengers still has to connect anyways. Internationally, it leaves a lot of interesting question marks as to what happens if US/AA is going to become a part of Star.
     
  19. DestinationDavid
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    No need to assume, it's a fact that *A has more passengers than OW, but that doesn't mean a US/AA combined carrier would be better off in *A.

    Your thoughts assumes all of US and AA's customers decide to stick with *A and don't look to ST. It's a bad assumption to think of the outcome as if all customers will blindly follow their previous carrier of choice. Not to mention you're essentially viewing OW connecting traffic as less than half of what *A is doing. That's a bit skewed IMHO.

    As for your 2nd point, it illustrates just how silly this discussion is to be honest. US/AA would not stay in *A. The competitive implications are clear. Just look at the LAN and TAM merger to see how that worked out. I haven't seen any serious analyst indicate they think a combined US/AA would remain in US, not to mention the documents from the AA unions stated US notified them that a combined carrier would be in OW.
     
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  20. General_Flyer
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    General_Flyer Gold Member

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    Well, one can only hope right? But, even UA/CO stated that it is true the other way around, which is exactly your point.

    Besides, I'd rather see US and AA a separate entity than losing it to OW, owing to the fact that you are correct.

    With Virgin Australia looking at ST instead of SA, and US/AA looking at OW, Star seems to be losing a bit of its glitters every single day..
     
  21. DestinationDavid
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    Not to mention losing BD, JK, and most likely JJ this year, too.
     
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  22. General_Flyer
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    General_Flyer Gold Member

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    Yup.. And what do they gain? Ethiopian and BR, hardly enough to cover those losses. US will be one of the largest yet.
     
  23. Seacarl
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    Seacarl Gold Member

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    Actually Ethiopian and BR more than cover for BD & JK - those were both minor airlines.

    I haven't heard any news out of JJ. That's the biggie. It's not clear that they are better served in OW than *A.
     
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  24. DestinationDavid
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    I never said ET and BR were minor additions, that was General_Flyer.

    Also, the discussion on this merger topics always seems to overlook the massive importants of regulators in these decisions nowadays. It doesn't matter if LATAM thinks they are better served in *A, the regulating authorities for the merger have stated that LATAM cannot remain in two alliances, and that the new carrier cannot be in the same alliance as Avianca and TACA. So for LATAM to choose *A, they'd have to convince *A to kick out two members. Most seem to think the likelihood of *A booting two carriers is slim to none. Same with the US/AA merger, regulators aren't going to look at the share of the US domestic market *A would have with US/AA/UA/CO in a single alliance against DL/NW and give that a thumbs up.
     
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  25. General_Flyer
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    Regulators are only playing their part in making sure there is fair competition as you stated before. The only non alliance carriers that are large enough in the play are AS, WN, and possibly VX.

    The game of alliances are very complicated as it seems even before adding up the regulators. I do hope for the best to both AA and US, no matter what alliance they're going to be.

    BR's routes in my opinion is relatively minor when compared to having SQ, NH, and OZ in asia already. Although it is a nice gesture having a Star Alliance carrier flying to my hometown ever since SQ pulled out and placed MI in their place.

    I'm not sure what Ethiopian brings to the table, however, they have a relatively small role to fill since South African is already there.
     

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