UA AND US Merger Talks

[Kneecaps]

How important is labor union support in merging the two airlines?

For example, could the pilots unions both USAPA and ALPA vehemently oppose / protest against the merger in any way that would prevent the merger from occuring?

Follow up question: What about the wholly owned regional pilots, 800-1000 ALPA pilots between PDT & PSA, do they have any say over whether or not the companies merge?

 

[Poug Darker]

How important is labor union support in merging the two airlines?

For example, could the pilots unions both USAPA and ALPA vehemently oppose / protest against the merger in any way that would prevent the merger from occuring?

USAPA could grieve the CoC end run that Doug has advertised already. Could tie things up for 6 months to a year. Lobbying efforts by the unions could delay or thwart the process.
Its definitely better to have labor as an ally. But apparently Doug has it all figured out...it'll be interesting to see how it all unfolds - or unravels.
Cheers.

 

[Reed Richards]

Almost guaranteed. Look at the restrictions put on the US/DL slot swap so far - UA would add more slots to those of US at DCA than so far is allowed in the slot swap and that's before IAD is considered in the mix. No way would the DOT/DOJ allow one carrier to have 50% or more of the market at both airports.

Last time US and UA seriously tried to get together, even divesting the shuttle in the initial application with it's slots wasn't enough to satisfy the Feds so why anyone would think the deal would go through with no changes at DCA/IAD is beyond me. IAD might escape relatively unscathed since it's not slot controlled, but expect big changes in DCA.

Jim

Kudos Jim for pointing this out. We currently have one public (U/Delta) and one fantasy transaction (U/UAL) in play. The two indeed do not agree....why would U divest itself of LGA assets to increase its presence in DCA..and then have to shed assets at DCA to a level below that of its original presence...just to get the UAL deal to pass muster?

RR

 

[cynic]

USAPA could grieve the CoC end run that Doug has advertised already. Could tie things up for 6 months to a year. Lobbying efforts by the unions could delay or thwart the process.
Its definitely better to have labor as an ally. But apparently Doug has it all figured out...it'll be interesting to see how it all unfolds - or unravels.
Cheers.

There is nothing Parker could do to get the pilot group on his side.

 

[Bear96]

2. For the upteenth time, CLT offers UA nothing that they can't do at IAD. They are 322 miles apart. Slightly longer than PIT-PHL, but unlike either, the government business is recession-proof.

Very true. Same with PHL: PHL offers nothing UA can't do at IAD, and is even closer to IAD than CLT is.

 

[goneflyin]

Any chance that UAL would divest itself of it's IAD hub in favor of Philly? If either the IAD ops or the DCA ops would have to go, I would think that the DCA operation would be the one to keep.

 

[Poug Darker]

Any chance that UAL would divest itself of it's IAD hub in favor of Philly? If either the IAD ops or the DCA ops would have to go, I would think that the DCA operation would be the one to keep.

Why divest either? DCA is purely domestic, by law. Can't do international, doesn't have the runway anyway. An argument could be made that since international operations are forced to use IAD or BWI, then those are actually separate sements of the market and should be considered as such.
I stand by the DOJ's own stipulations that the 'DC Metro area' which encompasses all three airports and are interconnected by a fine interstate highway system, is considered one contiguous market area-and since our friends at SW and AT do such a fine job at BWI, the good citizens of the area have many low cost choices for air travel and need not trigger anti-trust concerns from the DOJ. Hey, they came up with those stipulations, make them own up to them.
As far as PHL goes, a shift of international connections to IAD would help alleviate the afternoon and early evening traffic jams. Keeping just the most popular O&D international out of PHL makes sense, but maintaining the level of international departures and the concurrent domestic feed connecting banks doesn't make sense. IAD is a much more efficient international hub.
Cheers.

 

[mweiss]

Why divest either?

That pesky DOJ. Just because they said it was three airports a decade ago doesn't mean they're going to use the same logic this time around. There's no stare decisis to hew to here (and the Supreme Court seems not to care about stare decisis anymore anyway).

As far as PHL goes, a shift of international connections to IAD would help alleviate the afternoon and early evening traffic jams. Keeping just the most popular O&D international out of PHL makes sense, but maintaining the level of international departures and the concurrent domestic feed connecting banks doesn't make sense. IAD is a much more efficient international hub.

Yes, absent any governmental input, it makes more sense for PHL to become more strictly O&D and IAD to become the surviving hub.

 

[back2CLT]

Delta has an international hub at JFK and is trying to build a domestic hub at LGA....what is so different about that, than what US/United would do in DC. I think we would see IAD domestic flying be reduced dramatically, with CLT being the primary domestic hub. IAD would only connect to large domestic markets, to funnel them to trans-Atlantic flying.....United and US would gain a lot by being even stronger at DCA.

CLT would probably neither gain nor shrink internationally, and would probably grow domestically. Maybe not many new routes, but I bet we would see larger planes, or more frequencies, as domestic capacity shifts from IAD. CLT might lose South America, in favor of IAD, but not Caribbean/Central America. I do doubt that CLT would see many new European destinations though, unless the market expands enough organically that it relies more on O/D traffic.

I would think PHL would be the bigger lose in the internaional equation. Markets like Oslo and Athens, which I assume have high volumes of connecting traffic, probably make more sense to fly just from IAD.

Does the permiter rule at DCA allow for flights to a carriers' hubs?

 

[redheadtempe33]

Regardless, just looking at O&D numbers will make it very clear that PHX is no match for LAX or SFO. There are plenty of reasons why that will persist for a long time.

Have you seen this map? I have no idea how accurate it is, but I don't think L.A. is as big for UA as everybody thinks it is ...

http://www.charlotteobserver.com/2010/04/08/1364993/graphic-usair-and-united-airlines.html

 

[jimntx]

Big or not. LAX is the "prestige" station. (I don't see it myself, but...) It also is a major International jumping off place--particularly to Asia and the South Pacific.

There is no way that the 8 hubs shown on that graphic will all survive a merger. One of the gotchas in the hub-and-spoke arrangement is that you have to provide all possible hub-to-hub combinations. Given the East Coast congestion we already have, just imagine making sure that every current east of the Mississippi UAUA and LCC hub is connected to every other current hub in that category.

One thing I've noticed in following this merger issue is the certainty that LCC employees in a particular LCC hub have that their hub is the indispensable one, and that it's another hub that will be the big loser. PHL employees know that despite its proximity to NYC and DCA/IAD, the merged company can not possibly do without a hub with International flights at PHL. CLT employees know that a Southeastern US hub is required for the merged airline to survive.

If the merger goes through this time (and this is not just a ploy on UAUA's part to get CO back to the table), it will be very interesting to see the final outcome. But, remember those of us at STL with AA were assured that STL was absolutely needed as a reliever hub for ORD and DFW. At the time I was recalled in Nov. 2004, we had something like 200 departures a day from STL. As of 01April, we have 36 departures a day from STL, and 4 of those are American Eagle. Of the 32 mainline departures, 18 go either to DFW or ORD. I'm just saying...

 

[USFlyer]

Kudos Jim for pointing this out. We currently have one public (U/Delta) and one fantasy transaction (U/UAL) in play. The two indeed do not agree....why would U divest itself of LGA assets to increase its presence in DCA..and then have to shed assets at DCA to a level below that of its original presence...just to get the UAL deal to pass muster?

Simple: DCA will be divested to CO so the DCA presence stays in Star.

Also, as far as CLT/PHL goes, some points to remember. First, O&D at PHL is very strong. No way UA would route all those folks through IAD. That makes no sense.

Second, CLT and IAD nominally compete with each other. There's a reason why UA wanted US in Star in the first place. I know LOTS of people who live in the SE who rarely fly thru IAD. CLT is considered much more convenient and frequently saves up to an hour of travel time. CLT has a place in a combined UA-US. Perhaps not the transatlantic traffic but certainly the domestic traffic.

Besides, there is no way the bulk of the CLT connecting traffic could be shifted to IAD. That would mean UA would bleed significant revenue likely to DL via ATL for those in the SE.

 

[FWAAA]

Have you seen this map? I have no idea how accurate it is, but I don't think L.A. is as big for UA as everybody thinks it is ...

http://www.charlotteobserver.com/2010/04/08/1364993/graphic-usair-and-united-airlines.html

The difference is that LAX and SFO are key transpacific gateways; CLT is unlikely to ever have nonstop service to anywhere in Asia. First Class and Business Class cabins to China, Japan and Australia (and many other Asian destinations). CLT has a lot of passengers, but I assume that a large percentage of them are connecting and not O & D. Same problem with PHX. Except that CLT will have some European nonstops while PHX will likely have very few (if any).

 

[SS255]

Have you seen this map? I have no idea how accurate it is, but I don't think L.A. is as big for UA as everybody thinks it is ...

http://www.charlotteobserver.com/2010/04/08/1364993/graphic-usair-and-united-airlines.html

UA scaled back their LAX operation a few years ago (and ceded a lot of business to AA in the process). It's still pretty significant, but not like it once was.

If this merger goes through, I would suspect that UA would want to beef their operation back up at LAX, and attempt to go head-to-head with AA once again, but focusing more on the Southwestern/Southern portion of the country, where there is currently a huge gap in service. The problem with SFO is that the weather creates hideous delays. LAX is not prone to the same weather issues, so from an efficiency standpoint, utilizing LAX as a domestic point-to-point hub makes a whole lot of sense.

 

[jimntx]

Simple: DCA will be divested to CO so the DCA presence stays in Star.

I wouldn't bet on that if I were you. The FAA and the DOT have already made it clear in the proposed DL-US slot swaps that divestitures to other (particularly, true low-cost) carriers will have to occur. Now, the argument could be made that FAA/DOT has no authority over LGA which is owned and operated by NYNJPA. And, one might even get a judge to agree. However, guess who owns and operates DCA? The Federal government under the control of Congress. Slots at DCA will be divested as instructed by the FAA.