Hopefully this thing will get merged shortly, most likely with Alaska. There is no way Parker will sit on it if he gets a chance to sell. I really can't see anyone happy to get the west operation, which sits right in Southwests back yard. If you didn't have a link into the east route system, Southwest would continue to hack away at the west operation. Your only refuge is to fly our routes, which are mostly out of Southwests' sphere. CLT is very much out of it for now. Hopefully Republic will make a bid for that PHX piece, you will get what you want, and we will too. Somebody would be very happy to pick up CLT, which is a great city, and the PHL with the Int'l ops.
3:01 pm | April 10, 2011 |
Business
Airline execs discuss mergers, innovation
The Arizona Republic
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In an executive panel at an airline conference that wrapped up Friday in Phoenix, industry players' conversations ran the gamut from industry consolidation to whether market share is impacted by investments in technology and operational strategies during winter storms.
Doug Parker, CEO of US Airways, lauded the many U.S. airline mergers that occurred within the past six years and the reduction of the number of seats in the air. Those factors led to a majority of the industry's biggest players reporting profits in 2010, he said.
The comments followed his assertion on Wednesday that US Airways would be part of the next big merger.
Scott Kirby, the company's president, also was a proponent of the airline's consolidation, likely with one of the industry's bigger players.
Kirby said Friday that the carrier could not merge with airlines that have a smaller market share, such as JetBlue Airways or Alaska Air, because their cost structures differ so greatly from US Airways and because their route networks aren't compatible with that of US Airways. US Airways is based in Tempe. JetBlue and Alaska each commanded 3 percent of the market share in 2010, compared with US Airways' 10 percent.
US Airways had the fifth-largest market share in 2010, trailing United Continental Holdings, Delta Air Lines, American Airlines and the share held by Southwest Airlines and AirTran, whose merger is pending.
Moving from the business side, Parker discussed a topic that directly affects fliers' experience in the air.
Although carriers should make investments that will generate sufficient returns in an effort to sustain long-term profitability, he said on occasion domestic airlines turn toward investments that don't make economic sense.
He pointed to the installation of Internet on planes as an example.
"What we end up paying for the product doesn't come close to covering the costs . . . at least not now," Parker said.
He said that domestic airlines such as US Airways invest in products such as Wi-Fi because they are worried competitors will take a portion of their market share if they don't make the investment.
Their slice of the market largely never changes, however, because over time all carriers opt in to purchasing the product or service, he said.
"You cannot drive market share through product differentiation," Parker said.
Stephen Kavanagh, chief commercial officer of Ireland-based Aer Lingus, suggested implementing a new Wi-Fi business model that shifts the cost burden from the airline to the service provider.
He said Internet providers should assume the costs of retrofitting a carrier's plane and provide the airlines with a commission.
Wrapping up the 20th annual Phoenix Sky Harbor International Aviation Symposium, the executives discussed the havoc bad weather can bring, and the best approach when it happens.
During storm season, sometimes canceling a mass number of flights a few days before a big storm hits makes the most economic sense for the airlines, Parker said.
"We may be able to fly, but if it looks bad, we start canceling early," he said.
In years past, airlines tried to get as many planes off the ground as possible, he said. But that led to people being displaced all over the system and displeased customers several days after the storm had blown over.
Parker said US Airways' new mindset is "when the storm is over, we'll be ready to go."
Weather troubles could wane to some degree with the rollout of the NextGen air-traffic control system in the next five to 10 years, said Henry Krakowski, chief operating officer of Air Traffic Organization with the Federal Aviation Administration.
While the implementation of NextGen initiatives won't relieve delays and cancellations due to major storms, it could assist pilots and air-traffic controllers at airports that experience delays due to milder weather factors such as fog
Read more: http://www.azcentral.com/arizonarepublic/business/articles/2011/04/10/20110410airline-executives-discuss-mergers-innovation.html#ixzz1JA0I9i83
