AirKarp

ACI-NA notes: AA-US merger talk, etc.

RSS
Aviation industry consultants discuss American-US Airways merger prospects and more.

Some interesting commentary from the annual Airports Council International-North America (ACI-NA) Conference and Exhibition in San Jose, California…

On the American-US Airways merger

Deborah Meehan, president and CEO, InterVISTAS: “Most people feel consolidation has gone too far, but they think it’s unfair to stop with US Airways-American. It’s almost our sense of fairness that wants the merger to go forward … Part of the problem with the merger is we don’t have a troubled carrier. American has gone through bankruptcy and rationalized its fleet. It is reporting high levels of profitability … It’s got a lot going for it … [If the Department of Justice succeeds in stopping the merger] you could end up having a virtual merger: US Airways goes into oneworld and [American and US Airways] start acting as one.”

Stephen Van Beek, executive director-policy and strategy, LeighFisher: “There’s a third option [aside from the merger happening or getting blocked in court]: a negotiated settlement. I think [American and US Airways] made a mistake in not dealing with the [Washington] National Airport [market share] issue up front … National’s a mess anyway and US Airways shouldn’t be using it as a connecting hub. If they resolve the National issue, then you would get into [DOJ objecting to the merger] for technical reasons. Remove that big piece and maybe you can get a negotiated settlement.”

Edward Shelswell-White, principal, LexVolo: “[If the merger fails], American should determine what it’s best at [and focus on] domestic routes where it’s strongest and Latin America. [If American remains a standalone carrier], it’s too late for them to compete with United and Delta on international service.”

On ancillary revenue

Shelswell-White: “Airline customers are more sensitive to fare increases than ancillary fees. It’s not rational, it doesn’t make sense, but that’s the way it is.”

Van Beek: “Airlines have been very effective in opposing the [Passenger Facility Charge] … The ironic thing is they now collect far more in baggage fees than PFCs.”

On whether US airlines will grow domestic capacity again

Shelswell-White: “What happened after 2007 was nothing short of traumatic for the industry. Airlines were almost psychologically scarred … So capacity cuts came. It was all about cutting out supply that couldn’t generate demand that would be profitable … Until you see a long-term sustaining of significant profit levels, you’re not going to see growth from [mainline US] carriers … If there’s growth, it will come from the ultra low-cost carriers [such as Allegiant and Spirit], not from legacy carriers or even traditional low-cost carriers.”

Van Beek: “The ultra-low cost carriers are a European import to the US. They are the ones growing fastest. If network carriers continue raising fares, it creates an opportunity at the bottom for [ULCC] leisure carriers.”

Please or Register to post comments.

What's AirKarp?

ATW senior editor's blog

Blog Archive