Agree. I too was shocked that DAL was one of the airports that AA had to divest. Makes me wonder if there has been new nego over the rule that SWA would have to give up gate for gate if they were to open a gate at DFW. I think the only way AA would agree to divest DAL gates would be if SWA was restricted from gates at DFW- Just my opinion at this time- a guess if you will, (don't need WT twisting my words around).
And on another note WN, I have no idea if the W/A agreement can even be changed, even if both parties agree, as it took so many different groups to sign off on the agreement before... I believe there is more and we will find all that out after this all settles down and all the awards are announced...
The reason is that, even though you think the DOJ made its decision in a vacuum, they interviewed lots of airline execs including AA’s competitors as part of the investigation. That is precisely why AA wanted to see the list of interviewees but was denied.
There is no doubt that WN made it very clear that AA has done everything humanly possible to limit WN’s ability to compete in N. Texas since AA moved its HDQ down there. The famous call between AA and BN was just one of many episodes that prove how badly AA wanted to eliminate true competitors and create a monopoly – and if they couldn’t do that they wanted a very separate oligopoly. Crandall’s entire route strategy was built around an AA presence in the most restricted access markets in the world – LHR and Latin America – and he wanted the same thing in N. Texas.
The DOJ heard WN’s cries – and they are absolutely valid – and AA will not get the opportunity to compete with WN precisely because of the merger; losing gates at DAL is just one more high price that AA is paying for the merger. When it finally becomes apparent how much the merger has hurt AA rather than helping it, it will be too late. But the creditors will have been paid by that point and WN will have a very healthy operation at DAL and AA won’t be allowed to play there.
The WA won’t be changed. And why would WN want at this point to change something that is now going to allow them to compete against AA after 40 years?
Yeah, I know. Kinda my point. Given all that has- and is- going on in the industry right now, saying 2014 will be a pivotal year is about as prescient of prediction as saying the sun will rise in the east.
As for as shocks to the (entire) system, I'd say that while all the current moving parts are nothing to sneeze at, 9/11 reshaped the industry at a core level far more. Just a thought.
Great. Feel free to clarify it, then.
No, not every year is or will be like 2014.
There won’t be many years that 20% of the slots at the nation’s capital change hands while at the same time Latin America opens up (whether legally for the first time or finally in true practice) to competitors while AA faces a true low fare competitor for the first time at its home and largest hub. Even if WN doesn’t keep fares down for the long haul, they will keep them down long enough to draw as much of the traffic that flies AA from DFW as WN can possibly fit into their 16 gates at DAL.
In total, I absolutely agree with you that 9/11 was the biggest shock to aviation and to American life and psyche.
2014 will be the biggest REARRANGEMENT of the industry and it will affect some carriers far more than other carriers.
I agree with both of you on the puzzling requirement that new AA give up all of its presence at an airport where it only had a 10% presence. LGA and DCA? Sure. But its only two gates at DAL? Bizarre.
The real antitrust violation happened when various governments blessed three competitors (WN, CO and AA) when they agreed on market allocation in carving up the DAL-DFW market. It's beyond ludicrous that WN was permitted to hold 80% of the gates when there's a multi-party agreement that there cannot be more than 20 gates. I can see why the parties who are on the hook for DFW wanted DAL closed and why they were willing to let WN keep 16 out of the 20 gates with the punitive provision that WN would have to give up gates at DAL if it moved anything to DFW.
16 gates in the Dallas Fort Worth metroplex caps the size of a nimble competitor (WN), which obviously makes AA happy. WN can get as efficient as humanly possible and buy a bunch of 737-900ERs if it wants, but its passenger thru-put in the metroplex is capped. The likely cap is about 150-160 daily flights with the current fleet, and the larger the planes, the longer the turn times, so even if WN bought some 777s for its DAL operations, its passenger capacity would not grow very much.
Meanwhile, over at DFW, there's still room to build another half a dozen terminals, effectively doubling the size.
I've said it before - if WN gets these two gates, that only compounds the anticompetitive effects, since WN would then have 90% of the DAL gates. The feds would never permit any one airline to have 90% (or even 80%) of the slots at LGA, DCA or JFK. And yet at DAL, WN already has 80% and of course would like another 10%.
And you don’t think that DL hasn’t been making these same comments to the DOJ? It is precisely because DL knows full well that WN isn’t getting those gates and that there are no competitors that DL is moving forward with its schedules.
It isn’t lost on the DOJ how screwed up N. Texas aviation has been but they also recognize that they can’t fix a problem in which the solutions have been limited by the size of DAL.
As much as you want to minimize the impact that WN can have, all of AA’s domestic local demand from DFW can fit on the capacity that WN can deploy from DAL. Nearly all of DL’s departures are over by 7.30 (maybe earlier) at DAL and yet they can fit 11 flights/day/gate into their schedule so you shouldn’t be surprised if WN is able to push more than 10 flights/day/gate thru their facilities.
Even WN only captures half of what AA is caring from DFW in AA’s top 20 markets, that is an enormous amount of competition of a scale that has never seen at DFW.
You can argue about how much space there is DFW, but the size and value of the local market will dictate how much capacity can be added by any carrier. The market will simply not grow enough to create that level of long-term demand.
There will be casualties from the increased competition long before the foundation is even poured on a new terminal if it were started tomorrow.
