FrugalFlyerv2.0
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- Oct 29, 2003
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WorldTraveler said:5. Despite gaining no more gates, so far as we know, DL is still adding new service from LAX to BOS and DAL over the next year using its present gates so there is obviously some room to expand even within the present facilities. There really is not a huge strategic gap between DL and AA or UA from LAX. Pre-merger AA and UA’s size difference comes from serving smaller cities that will not significantly change the competitive balance whether DL serves them or not. DL’s biggest strategic difference other than LHR and ORD from LAX is in the transcon markets and even that could probably be added given DL’s existing gates. Yes, DL needs to grow at LAX but risking giving away gates or adding bulk that may or may not provide a strategic advantage isn’t worth it.
6. The current gate situation at either LAX or SEA is not set in stone forever. It is also possible that DL could buy out gate leases from other carriers, some of whom could move to the TBIT. You argue that money speaks, dawg, but don’t seem to believe DL could also spend money to buy gates. If the primary need for DL is to gain gates, I can assure you that DL could do it for far less than the $5B it would take to buy AS. Further, UA cannot sit on its present gates indefinitely without either flying routes – which will increasingly have to be done at losses given their cost disadvantage – or they will have to sell or have the airport repossess their gates.
I don't think your conclusions are accurate. At LAX, DL is #4 (in terms of passengers carried). DL (mainline) at LAX carried about 2 million less passengers than AA or UA. That's a lot of passengers, especially if as you insist they were all from just smaller cities and LHR and ORD. So, unless DL expands massively at LAX, there is no way they're close to UA and AA. Ofcourse I didn't add the DL Connection to the DL numbers, but at the same time I didn't use AE + US in the AA totals and I didn't use UA Express in the UA totals - but it wouldn't help your premise regardless.
Obviously DL could buy gate leases from other carriers at LAX, but are there any for sale? Moreover, if any do become available, are the other carriers at LAX just not going to want/bid on the available gates?
Currently the ALK market cap is approx $5 billion ($72/share). If you can seriously state that DL would purchase ALK for less than $5 billion you're further eroding any credibility you've got or you got your hands on some good ganja.