Jack Bauer

Just for fun here are my merger predictions based upon business models, fleet types, hubs, etc (not necessarily what I would like to see) over the next 5 years:

Delta-Hawaiian: Delta wants any additional Haneda slots it can get its hands on. The fleets (A330 and 717) could fit together nicely. Delta can only choose one between Hawaiian or Alaska but not both (due to route concentration and likelihood of approval). Delta can flex up/down out of LAX/SEA should they decide to take some flying back from Alaska, already having hubs in both locations. Alaska doesn't appear interested in a merger (quotes from leadership). They are expensive (stock price) and currently making money on HI flying and their west coast hubs. Alaska has had a good thing going with next to no competition from Delta as Delta has ceded west coast flying to Alaska (some say to prepare the way for an Alaska merger that now wont happen?). That said, Alaska is getting competition from Virgin and will soon have more competition from the "me too crowd" now coveting their Hawaii flying profits.

With the Delta/Alaska code share, Delta is "getting the milk for free" if you believe in that kind of nonsense. For the record, I like the guys at Alaska...just would prefer Delta doesn't outsource west coast flying. Btw, has anybody noticed Delta now running some Beijing flights through Hawaii on the way to SEA? Is this new or been going on for a while?

American-US Airways: (this will face some hurdles but be successful in the end)

Jetblue-Virgin: One hold up could be Richard Branson's pride. keep the Virgin name in tact (ie Virgin Blue...I know its already been done...or Jet Virgin) and Branson as a part owner and it will fly.

Spirit- Frontier: Spirit is currently testing the Denver market. Bedford is losing his shirt with Frontier. Quickly trying to make it into a Ultra Low Cost Carrier and keeps talking about selling (even promised the employees "his best effort" to sell in return for them taking another pay cut lol). If Spirit likes what they see they may pick Frontier up at a fire sale price to grow more quickly out west. Spirit's costs are far lower than SWA and therefore able to undercut the once "low cost leader". Spirit will be able to move into leisure markets, taking market share from other carriers who focus on World of Walmart customers. The best way to hedge against this is going after the business traveler. SWA will have a difficult time competing with Spirit, sticking with their "bags fly free" policy (not an ULCC model leaving potentially Billions with a "B" of dollars behind) and do not offer first class. Kind of the worst of both worlds. PS- I hope my friends at Frontier end up in a good place.

This will leave us with 7 US Airlines:

Delta
United
American
Alaska
Southwest
Spirit
Allegiant

OK there is Sun Country too. I believe they have just over 100 pilots and doing more charter work than anything else.

On the Regional Airline side there will be a handful still left (as long as Delta, United, and American keep writing them checks). Skywest Inc will have the largest portfolio of the bunch.

As another side note, it will be a mad dash for all the so called low cost carriers to add Hawaii and flying south of the boarder. It's so "IN" right now

Anybody else have other ideas? We can refer back to this thread in five years (or less) and see who was right.

Crystal Ball Power Select: OFF

sailingfun

Hawaii is not a profitable market for most airlines. It is offered because it is a network component needed to attract corporate and FF accounts. The yields are very low and rarely does it make money for anyone. Its a loss leader so to speak.
Any decision by Delta to purchase HNL would not involve their aircraft. Good used aircraft are available within days for the taking. No ones is going to buy a airline for their fleet with the current airline market. There are parked A319's available tomorrow and A330 next week.

Jack Bauer

OK, what about any Haneda slots or Asia flying? Not worth the trouble? You are probably right about the aircraft availability but all things being equal it is better to combine with a likeminded fleet rather than have an oddball (think SWA). If Delta were to do another acquisition/merger who would you say is a worthwhile target if any? Some people say Jetblue. I dont see that ever happening. Too much divestiture to get the deal done.

sailingfun

I did not say a word about Haneda. Haneda slots are very valuable. Delta is pushing hard on the next round of negotiations over Haneda. My point was that pilots place way to much emphasis on aircraft. Aircraft can be picked up anytime. Delta even has a agreement with Boeing to jump into any production line for aircraft at almost any time. There is a glut of production capacity on narrow bodies at the moment because of the upcoming NEO and MAX. That is how Delta picked up the 900ER's for half price and less then the C series would have cost. There are parked A319's in several locations. Delta has identified 60 to 70 airframes they can get right now if desired and all are under 7 years old. Merger decisions will not have anything to do with aircraft. Other factors such as Haneda will be what is in play.

Jack Bauer

Understood. Care to take a stab at the other part of the question or you know something you don't want to share? Btw, Alaska is currently making good money with its Hawaii routes. It represents just under 20% of their portfolio but bringing in more than that in revenue/profits. That's why they continue to add flights hand over fist. Will that last as others enter the market. Probably not.

coryk

Doubtful. The clientele going to Hawaii probably shops for the cheapest fares regardless of carriers. (in most cases, I'm sure there's still a sliver of brand loyalty)

Alaska is forming it's niche which includes Hawaii mainly from the dismiss of Aloha. With Allegiant, SWA (at some point) entering the market, it could very well become over-saturated. Then again, so is NE to Florida. Who knows.

Jack Bauer

I have a source who knows what they are making going to Hawaii and it is good profits (over 30% of their total profits) for the time being. As you say the void left from the departure of Aloha, ATA etc have helped open it up. I agree with your sentiments on future saturation.

Timbo

The exact same things were said about Orlando and Las Vegas when DL Magt. killed Express and later, Song.

Yet somehow, someone (SWA) has figured out how to MAKE MONEY hauling THOUSANDS of 'low yeild' pax in and out of those places, every day, without a single First Class seat.

If "High Value Customers" are going to save us, why don't we just completely fill all our airplanes with lie flat seats and leave the Low Yeild, Vacation Travelers at the gate?

Flyby1206

I agree with all of your picks, except I think Alaska/Hawaiian will happen since so many carriers are getting crazy about adding Hawaii capacity. I could see DAL or AA/US then making a move for the combined carrier.

I think on the regional side things will really shrink. Skywest will be the biggest/best, RAH/pinnacle merge and become a smaller carrier with reductions from the AA/US merger. PSA/PDT/Eagle will gain more flying after the merger. Mesa will get bought by TSA/Compass.

The theme at regional level will be more 70+seaters ,less 50s

TenYearsGone

For what its worth, AND IT IS FUN SPECULATING, I think that DAL<---->Hawaiian will join.

In Narita, the other day, I was talking with a CSR (lol, great source) and she said they are getting ready for a new carrier that DAL is very interested in.

Again, for what it is worth.

TEN