I'd have trouble imagining a worse merger than UA/US. The networks aren't very complementary, the fleets match loosely at best, and the fundamental business philosophies are nearly diametrically opposed.
Even discounting all of the above, both airlines have horrible front-line employee messes (from somewhat different causes). Tossing all of them into the cement mixer of a merger will almost surely cause the resulting airline to collapse under its own weight.
Perhaps consolidation, in a general sense, would be beneficial to the industry. I'm not convinced, though. There are a few benefits that one could typically expect from industry consolidation:
- Economies of scale
- Economies of scope
- Reduction of competition
The first two would decrease costs and/or provide additional value to customers. The third would increase revenue.
What mergers would increase economies of scale? I can't imagine any that would involve UA, US, DL, CO, or WN. All are well beyond the size where they could have larger fleets without commensurately larger everything else (maintenance facilities, reservations facilities, IT facilities, etc.). Smaller airlines may gain some economies of scale by merging, though.
What about economies of scope? Adding hubs in regions that aren't well covered can certainly help, adding value to customers. CO is weak in the west (and so is DL, to a lesser extent). UA is weak in the south. US is weak in the northwest. A CO/UA merger is probably the best fit here, though Dixieland still has marginal coverage. Prior to the DL/NW merger, DL/UA would have been better in Dixie.
As for reduction of competition, nothing would be better now than a DL/UA merger. Of course, reduction of competition is something that causes federal regulators to sit up and take notice. Maybe UA/US would have some value in competition reduction, but aside from the DC area the overlap doesn't appear to be sufficient to generate real upward price pressure.
So, in my estimation, the best remaining merger (excluding fleet and employee issues) is UA/CO. Even that one is likely to go badly if implemented. CO has done a much better job of managing profits, but UA is likely to be the dominant business model in that combination.
One final note...mergers tend to result in reductions in perceived redundancies. In airlines, this often translates to dehubbing. Decommissioned hubs can be fertile ground for new airlines to appear, or for existing airlines with little regional presence to expand. And the cycle begins anew.
Even discounting all of the above, both airlines have horrible front-line employee messes (from somewhat different causes). Tossing all of them into the cement mixer of a merger will almost surely cause the resulting airline to collapse under its own weight.
Perhaps consolidation, in a general sense, would be beneficial to the industry. I'm not convinced, though. There are a few benefits that one could typically expect from industry consolidation:
- Economies of scale
- Economies of scope
- Reduction of competition
The first two would decrease costs and/or provide additional value to customers. The third would increase revenue.
What mergers would increase economies of scale? I can't imagine any that would involve UA, US, DL, CO, or WN. All are well beyond the size where they could have larger fleets without commensurately larger everything else (maintenance facilities, reservations facilities, IT facilities, etc.). Smaller airlines may gain some economies of scale by merging, though.
What about economies of scope? Adding hubs in regions that aren't well covered can certainly help, adding value to customers. CO is weak in the west (and so is DL, to a lesser extent). UA is weak in the south. US is weak in the northwest. A CO/UA merger is probably the best fit here, though Dixieland still has marginal coverage. Prior to the DL/NW merger, DL/UA would have been better in Dixie.
As for reduction of competition, nothing would be better now than a DL/UA merger. Of course, reduction of competition is something that causes federal regulators to sit up and take notice. Maybe UA/US would have some value in competition reduction, but aside from the DC area the overlap doesn't appear to be sufficient to generate real upward price pressure.
So, in my estimation, the best remaining merger (excluding fleet and employee issues) is UA/CO. Even that one is likely to go badly if implemented. CO has done a much better job of managing profits, but UA is likely to be the dominant business model in that combination.
One final note...mergers tend to result in reductions in perceived redundancies. In airlines, this often translates to dehubbing. Decommissioned hubs can be fertile ground for new airlines to appear, or for existing airlines with little regional presence to expand. And the cycle begins anew.
