DOJ to block AA/USAir merger
08-13-2013, 12:47 PM
#121
Gets Weekends Off
Joined APC: Jul 2009
Posts: 581
From LA Times re the reasons that the DOJ gave-
On offering in-flight wireless Internet:
In a 2011 email exchange, one senior executive groused about the need to install in-flight wireless Internet.
He wrote: "[N]ext it will be more legroom. Then industry standard labor contracts. Then better wines. Then the ability to book on Facebook. Penultimately, television commercials..."
US Airways Chief Executive Doug Parker wrote back: "Easy now. Consolidation will help stop much of the stupid stuff but inflight internet is not one of them."
On a rival's aggressive maneuvers to compete:
In 2010, a competing, unnamed airline extended a "triple miles" promotion, which set off a chain of emails within US Airways, according to the complaint. The lawsuit also said that the airline was expanding service.
According to the complaint, Parker sent an email to other senior executives about how to counter that rival airline's maneuvers:
They "are hurting [the rival airline’s] profitability – and unfortunately everyone else’s,” he wrote.
Those executives exchanged several emails debating how to get the attention of the rival airline, including portraying "these guys as idiots to Wall Street and anyone else who’ll listen."
Eventually, Parker forwarded the email chain full of messages to the chief executive of the rival airline, the Justice Department said.
On ending US Airways' Advantage Fares program, which offers lower fares on some routes:
One of the major points raised in the Justice Department complaint is that US Airways had competed with American and other carriers on certain routes by offering discounted fares.
Under its Advantage Fares program, it offered cheaper fares but on routes that included at least one stop. Other carriers offered nonstop fares for those routes, but for much higher prices.
According to an October 2012 internal analysis cited in the complaint:
The Advantage Fares "program would have to be eliminated in a merger with American, as American’s large non-stop markets would now be susceptible to reactionary pricing from Delta and United," the analysis said.
On whether to raise a second checked bag fee to $100 to match Delta's price:
One executive, in an undated exchanged, mulled whether US Airways could do the same:
"Wow -- $100 is a lot for second bag. I would think there’s big passenger gag reflex associated with that, but if we can get it, we should charge it," the complaint said.
On whether to match other airlines' fee increases for checked bags:
According to the complaint, in July 2009 American Airlines raised its checked bag fee to $20. Other airlines had a Web-only discount for $5 off checked bag fees. The decision for US Airways, according to the complaint, came down to either eliminating their Web discount or raise their fee to $25 and offer the $5 discount.
"I can’t believe I’m saying this, but I think we should stand still on this for now. I recognize that increases the chances of everyone standing still . . . the [dollars] aren’t compelling enough for us to stick our necks out first. I do think D[elta] or U[nited] won’t let them have an advantage, so it’ll get matched – I’m just not sure we should go first. If a couple weeks go by and no one’s moved, we can always jump in," Parker said
On Southwest's policy of not charging for a first checked bag:
In late 2011, a senior US Airways executive wrote about Southwest's policies and why US Airways does not follow suit:
“Our employees know full well that the real competition for us is [American], [Delta], and [United]," according to the complaint. "Yes we compete with Southwest and JetBlue, but the product is different and the customer base is also different.”
On a failed 2007 bid by US Airways to acquire Delta Airlines:
The Justice Department complaint mentions an exchange between US Airways chief executive and investors following the scuttled deal. If the deal had been successful, it would have reduced capacity and increased revenues.
"It’s part of what we tried to impress upon people as we were going through our run at Delta, was that . . . it was good for US Airways [and] good for the entire industry. We’re going to take out 4% of the industry capacity as we did that. Everyone’s 2008 numbers would look ... a lot better had that transaction happened."
There's more to this than meets the eye- the DOJ is drinking somebody's milkshake and it isn't ours for sure.
On offering in-flight wireless Internet:
In a 2011 email exchange, one senior executive groused about the need to install in-flight wireless Internet.
He wrote: "[N]ext it will be more legroom. Then industry standard labor contracts. Then better wines. Then the ability to book on Facebook. Penultimately, television commercials..."
US Airways Chief Executive Doug Parker wrote back: "Easy now. Consolidation will help stop much of the stupid stuff but inflight internet is not one of them."
On a rival's aggressive maneuvers to compete:
In 2010, a competing, unnamed airline extended a "triple miles" promotion, which set off a chain of emails within US Airways, according to the complaint. The lawsuit also said that the airline was expanding service.
According to the complaint, Parker sent an email to other senior executives about how to counter that rival airline's maneuvers:
They "are hurting [the rival airline’s] profitability – and unfortunately everyone else’s,” he wrote.
Those executives exchanged several emails debating how to get the attention of the rival airline, including portraying "these guys as idiots to Wall Street and anyone else who’ll listen."
Eventually, Parker forwarded the email chain full of messages to the chief executive of the rival airline, the Justice Department said.
On ending US Airways' Advantage Fares program, which offers lower fares on some routes:
One of the major points raised in the Justice Department complaint is that US Airways had competed with American and other carriers on certain routes by offering discounted fares.
Under its Advantage Fares program, it offered cheaper fares but on routes that included at least one stop. Other carriers offered nonstop fares for those routes, but for much higher prices.
According to an October 2012 internal analysis cited in the complaint:
The Advantage Fares "program would have to be eliminated in a merger with American, as American’s large non-stop markets would now be susceptible to reactionary pricing from Delta and United," the analysis said.
On whether to raise a second checked bag fee to $100 to match Delta's price:
One executive, in an undated exchanged, mulled whether US Airways could do the same:
"Wow -- $100 is a lot for second bag. I would think there’s big passenger gag reflex associated with that, but if we can get it, we should charge it," the complaint said.
On whether to match other airlines' fee increases for checked bags:
According to the complaint, in July 2009 American Airlines raised its checked bag fee to $20. Other airlines had a Web-only discount for $5 off checked bag fees. The decision for US Airways, according to the complaint, came down to either eliminating their Web discount or raise their fee to $25 and offer the $5 discount.
"I can’t believe I’m saying this, but I think we should stand still on this for now. I recognize that increases the chances of everyone standing still . . . the [dollars] aren’t compelling enough for us to stick our necks out first. I do think D[elta] or U[nited] won’t let them have an advantage, so it’ll get matched – I’m just not sure we should go first. If a couple weeks go by and no one’s moved, we can always jump in," Parker said
On Southwest's policy of not charging for a first checked bag:
In late 2011, a senior US Airways executive wrote about Southwest's policies and why US Airways does not follow suit:
“Our employees know full well that the real competition for us is [American], [Delta], and [United]," according to the complaint. "Yes we compete with Southwest and JetBlue, but the product is different and the customer base is also different.”
On a failed 2007 bid by US Airways to acquire Delta Airlines:
The Justice Department complaint mentions an exchange between US Airways chief executive and investors following the scuttled deal. If the deal had been successful, it would have reduced capacity and increased revenues.
"It’s part of what we tried to impress upon people as we were going through our run at Delta, was that . . . it was good for US Airways [and] good for the entire industry. We’re going to take out 4% of the industry capacity as we did that. Everyone’s 2008 numbers would look ... a lot better had that transaction happened."
There's more to this than meets the eye- the DOJ is drinking somebody's milkshake and it isn't ours for sure.
08-13-2013, 12:49 PM
#122
Gets Weekends Off
Joined APC: Nov 2005
Position: AA A320
Posts: 1,624
Originally Posted by Bilsch
If you take the emotion out of it, you can see that this will harm the consumer.
On a side note, how much is the Affordable Care Act hurting (or going to hurt) people? How many people will be forced into part time status? How many people simply will not be hired due to the employer side expense? How many potential great doctors will choose another career path because the $400,000 education cost isn't worth earning $125,000/yr (I know, still a lot of money by liberal hippie standards). How did most insurance premiums jump 25-30% this year? Don't these things hurt the middle class more than an airline merger... I'm glad race baiter Holder is on the case, ugh
08-13-2013, 12:54 PM
#124
Gets Weekends Off
Joined APC: Feb 2013
Position: French American
Posts: 417
Originally Posted by Magpuller
And we have a winner...
It's political posturing for the sake of the DOJ weenies justifying their salaries. Zero chance this merger won't happen. Some of these guys will find career scandals and unfortunate photos surfacing if they really try and fight it. Too much big money, big profits and big business at stake here.
They will huff and puff then they'll say "okay you can merge but only if you give up 20 slots at Who Gives Crap Intl. Airport."
Remember, between AMR and USA they have essentially 5 hubs on the east coast...They have got a lot to bargain with to satisfy this nonsense and it's probably already planned. My guess is PHL and MIA are toast.
It's political posturing for the sake of the DOJ weenies justifying their salaries. Zero chance this merger won't happen. Some of these guys will find career scandals and unfortunate photos surfacing if they really try and fight it. Too much big money, big profits and big business at stake here.
They will huff and puff then they'll say "okay you can merge but only if you give up 20 slots at Who Gives Crap Intl. Airport."
Remember, between AMR and USA they have essentially 5 hubs on the east coast...They have got a lot to bargain with to satisfy this nonsense and it's probably already planned. My guess is PHL and MIA are toast.
08-13-2013, 12:58 PM
#125
Banned
Joined APC: Jan 2006
Position: A-320
Posts: 6,929
Originally Posted by Martin404
Someone needs a drug test quick!
Whos the scum in that email loop that complained about paying industry standard wages? What a jackass
Originally Posted by savall
And we have another winner... Yes, US/AA will end up giving up more slots at PHL. The EU approved on the condition that more European carriers get PHL-LHR and I imagine the DOJ will want some slots to go to DAL & SWA to have more opportunity in the Philadelphia market.
08-13-2013, 01:00 PM
#126
Gets Weekends Off
Joined APC: Nov 2005
Position: AA A320
Posts: 1,624
Originally Posted by R57 relay
Why just stop this merger? Why don't they bust up UA and DL?
08-13-2013, 01:06 PM
#128
Gets Weekends Off
Joined APC: Jul 2009
Posts: 581
Originally Posted by savall
And we have another winner... Yes, US/AA will end up giving up more slots at PHL. The EU approved on the condition that more European carriers get PHL-LHR and I imagine the DOJ will want some slots to go to DAL & SWA to have more opportunity in the Philadelphia market.
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