US Airways May File Papers in Weeks on Delta NYC-Washington Swap

[FWAAA]

JFK Star Alliance

JFK has decent connections to Star Alliance flights to Europe, Africa, and Asia.

While that's true, what's in it for US? Star hasn't invited US to participate in the immunized joint venture between UA/CO, LH and other Star members where those members share revenue and expenses and coordinate schedules. US is on the outside, looking in, but not invited to the antitrust immunity reindeer games.

 

[PullUp]

While that's true, what's in it for US? Star hasn't invited US to participate in the immunized joint venture between UA/CO, LH and other Star members where those members share revenue and expenses and coordinate schedules. US is on the outside, looking in, but not invited to the antitrust immunity reindeer games.

Rumor had it that in exchange for LCC's 'yes' vote to approve the CAL entry into STAR, LCC would be permitted 5 more years of membership.
It is obvious that when that time period elapses, LCC will probably not be invited to stay in the alliance, unless by that time they are merging with UAL.
At any rate, look for changes in alliances in the coming years.

Cheers.

 

[BoeingBoy]

Rumor had it that in exchange for LCC's 'yes' vote to approve the CAL entry into STAR, LCC would be permitted 5 more years of membership.

Not rumor if Parker is to be believed. He said at the time in several Crew News meetings that that was the case. He's also talked about how much annual revenue US gets from belonging to the *A so I don't see US bailing out unless another alliance makes a better offer or the $$ changes materially as the immunized *A members start integrating ops more and that leaves US out in the cold.

Jim

 

[ggiby]

Not rumor if Parker is to be believed. He said at the time in several Crew News meetings that that was the case. He's also talked about how much annual revenue US gets from belonging to the *A so I don't see US bailing out unless another alliance makes a better offer or the $$ changes materially as the immunized *A members start integrating ops more and that leaves US out in the cold.

Jim

We will not leave the alliance that we are are with at this time... Star is the best one to be in according to Dougie

 

[Art at ISP]

Star is by far the best alliance out there, but it may not be up to US Airways in the end. If their service levels fail to meet Star minimum requirements repeatedly (and they do not measure up), they could be non-renewed when that agreement expires.

At the end of the day, with UA/CO in Star, the reality is there is no need for US to be part of Star. They may still see some revenue, but I would imagine once the integration continues at the new UA, that will decline. That said, in this business, whatever makes the LEAST sense is usually what happens...

 

[nycbusdriver]

As far as Star Alliance is concerned, US Airways is the weird cousin at the family reunion. He's family, so they have to tolerate his presence. But he tends to be ignored, muttered about and marginalized to the maximum extent possible.

The one bright spot for the Star Alliance is that this weird cousin has family ties (the contract) that expire in a few short years. Meantime, US Airways will be tolerated, at best.

 

[USFlyer]

Star is by far the best alliance out there, but it may not be up to US Airways in the end. If their service levels fail to meet Star minimum requirements repeatedly (and they do not measure up), they could be non-renewed when that agreement expires.

Do you have a document that clearly spells out the minimum requirements? I'd like to see this bumped up against the service US does provide to better understand the deltas.

 

[WorldTraveler]

I am curious to see what happens next. WN now has access to DCA. And, US is now a distant fourth in terms of size, with UA/CO, DL, AA and WN all much larger players now. The landscape has drastically changed since this deal was originally proposed.

I still don't like the idea of US giving up on LGA. Seems crazy that key NYC assets can't be better leveraged. One guess is reducing NYC makes US a better option for a merger down the road, since all the other players who could be merger partners already have a sizable NYC presence.

true... but LGA as well as other large coastal non-hub markets (BOS, LAX, SEA for example) are now becoming more and more like hubs. You can't survive in someone else's hub without being in the top 1-3 carriers in the market. There is not any value in trying to compete in markets like NYC-ROC/BUF/FLA if you don't have the mass to win the corporate contracts that fill the highest revenue seats in these markets.

Except not in the area where the DOT had concerns - a majority of DCA slots and half of LGA slots in the hands of a single carrier at each airport. It was that concentration of power that the DOT objected to, and with the push to relax/eliminate perimeter restrictions by some carriers (including US and DL) that domanance becomes a bigger issue.

Jim

Except that the same scenario exists in other markets including hubs. The issue is accessibility of new carriers and the acquisition of FL by WN shows that it is indeed possible to gain size through merger, the same way the network carriers gained mass in the slot controlled airports. DL and US agreed to provide access to a number of new carriers, just not the ones that wanted it (DOT) or the ones that the DOT said should be offered it (a blind process in which basically DL and US give up 20% of the slots in the deal for the DOT to redistribute as it sees fit).
The real question is how the deal itself will be amended given that US now has access to GRU via the UA slots but can't gain office and ticket counter space at GRU or an operating slot which only the Brazilian gov't can grant. Further, DL is now quite bullish on using all of its Brazil frequencies.

NRT is still a necessary part of the US network but I suspect that the terms of the contract itself will be reworked based on the changes in Brazil.

Could the federal government pass legislation permitting airlines to have more DCA beyond slots and permit current companies to transfer their current in-perimeter slots to beyond slots allowing US Airways to fly non-stop between DCA and SAN, LAX, & SFO?

Will the PANYNJ allow US Airways to transfer its JFK-PHX route authroity to LGA, which would permit US Airways to close its JFK operation and average down NYC unit costs?

Could US Airways consolidate its Mainline, Shuttle, and much of its Express operations within LGA gates 1-10 and use its 3 remote parking slots off of gate 1; along with its remote spots near the old TWA hanger, to reduce most of its $71.4 million LGA terminal lease, utiity, and maintenance expense?


Who knows what will happen, but one thing is for sure. Negotiations have been on-going for almost two years and there must have been a lot of discussions between DL, US, PANYNJ, MWAA, and the DOT.

There will be more slots added at DCA which the feds control. PANYNJ doesn't care about balancing national competition and isn't going to add slots to do so.

US will be able to gain some longhaul service at DCA but so likely will other carriers.

Part of the value of the transaction is for DL to gain access to the US terminal at LGA... US' operation can be fit at the Marine Air Terminal which will allow DL to move its Shuttle into the same facility as the rest of the operation which will allow them to provide connections to/from the Shuttle, something it cannot do now because of the separate terminal location.

While that's true, what's in it for US? Star hasn't invited US to participate in the immunized joint venture between UA/CO, LH and other Star members where those members share revenue and expenses and coordinate schedules. US is on the outside, looking in, but not invited to the antitrust immunity reindeer games.

US will hold onto Star because it is the best option for them right now.... US along w/ DL are the only carriers with a presence in the non-FL SE markets and US must hold onto that strength.
US does make money because of its unique network contributions to Star but no it does likely receive as much money or have the control that immunized carriers have.
I still believe that any further consolidation involving US will likely also involve AA but the question is whether AA can gets its costs down to levels that allow them to be a decent financial partner to anyone. IN the process of AA getting its costs down, it is possible that US could become the acquiring airline even if the AA name is ultimately kept.... ala HP.

 

[usa1]

I still believe that any further consolidation involving US will likely also involve AA but the question is whether AA can gets its costs down to levels that allow them to be a decent financial partner to anyone. IN the process of AA getting its costs down, it is possible that US could become the acquiring airline even if the AA name is ultimately kept.... ala HP.

That sounds absolutely correct ..... that's how our government, our court system and our industry managers operate. AA goes into bankruptcy, gets rid of a bunch of aircraft commitments, a lot of jobs, all defined pension plans & retirement health-care commitments (dumps those on the tax payer) then US Airways buys them out of BK court and those who are left work until the day they die!

 

[nycbusdriver]

That sounds absolutely correct ..... that's how our government, our court system and our industry managers operate. AA goes into bankruptcy, gets rid of a bunch of aircraft commitments, a lot of jobs, all defined pension plans & retirement health-care commitments (dumps those on the tax payer) then US Airways buys them out of BK court and those who are left work until the day they die!

You missed the other goal of AA if the go into BK in anticipation of a merger with LCC. They need to shoot for LCC pay rates. Hopefully, they won't overshoot like LCC did with the pilots aiming for AWA perennial bottom-of-the-heap pay scales.

 

[BoeingBoy]

Except that the same scenario exists in other markets including hubs.

Name another hub or major market that has artificial constraints on access imposed by the government.

The issue is accessibility of new carriers and the acquisition of FL by WN shows that it is indeed possible to gain size through merger, the same way the network carriers gained mass in the slot controlled airports.

Fine, let DL and US gain more access through mergers if it's so easy. Problem solved.

Jim

 

[Art at ISP]

Do you have a document that clearly spells out the minimum requirements? I'd like to see this bumped up against the service US does provide to better understand the deltas.

To be quite honest, it is not from a document, but from conversations with executives at both Star Alliance and other Star member airlines. I asked a number of pointed questions, and received some surprising answers...

There are minimum service levels and standards which must be adhered to...it is doubtful that these are public documents, but I have heard from more than one source that US does not measure favorably compared to other members.

My main point in the statement is that absent any agreement made between Parker and the Star Alliance with regard to US staying for 5 years in order to admit CO (which to me is now a moot point), I think US needs Star much more than vice versa...

 

[damajagua]

That sounds absolutely correct ..... that's how our government, our court system and our industry managers operate. AA goes into bankruptcy, gets rid of a bunch of aircraft commitments, a lot of jobs, all defined pension plans & retirement health-care commitments (dumps those on the tax payer) then US Airways buys them out of BK court and those who are left work until the day they die!

While that might eventually happen. Don't expected it any time soon. AA is sitting on $6 billion cash.
With that kind of cash at least 2 years to burn all that cash. A lot can happened in two years.

 

[usa1]

While that might eventually happen. Don't expected it any time soon. AA is sitting on $6 billion cash.
With that kind of cash at least 2 years to burn all that cash. A lot can happened in two years.

No hurry .... more than likely having a different administration in the white house would move things along more easily.

 

[USA320Pilot]

On May 5 US Airways President Scott Kirby said, "We continue to work with Delta and the regulatory agencies, Department of Transportation (DOT) and Department of Justice (DOJ) to get to somewhere where we can all accept. It is difficult when there are multiple parties negotiating. We hope to have something to file in the next couple weeks so stay tuned. We are cautiously optimistic."

This Thursday, May 19, will be two weeks since Scott Kirby had his comments published in About US, US Airways' Weekly Newsletter. "I believe" Kirby's comments were purposely placed into US Airways' Newsletter and are likely designed to "tip off" observant employees who pay attention to Corporate Communications that a revised agreement could be announced this week.

Could the Slot Swap look something like:

Could US Airways to remain in its current terminal and occupy gates 1 through 9?

Could Gate 1 be use the three current Express parking spots with boarding through the jetway and deplaning through the door on the southwest side of the terminal with direct access to Baggage Claim?

Could Mainline/Republic flights could operate from gates 2, 3, 4 & 9 with the Shuttle operating from Gates 5, 6, 7, & 8?

Could US Airways commence LGA-PHX flights with PANYNJ approval, suspend JFK operations, and end its JFK-PHX and JFK-CLT flights? Could ASMs would remain about the same with the NYC-PHX flights having higher yield in the LGA-PHX market than JFK-PHX?

Could a revised agreement prevent US Airways from taking custody of the Marine Air Terminal (MAT) and maintaining all of its operations in one building with minor disruptions?

Could US Airways transfer some of its LGA slots to Delta and obtain some of Delta's DCA slots?

Could US Airways add service from DCA to LAX, SFO, and SAN once the federal government adds additional DCA slots and approves existing slots to be flown beyond the perimeter?

Will this deal improve US Airways' bottom line and help remove NYC anti-trust concerns for a merger?