Wednesday, January 10, 2007

US Airways - Delta merger PREDICTIONS

I saw this story first thing in the morning and had to comment (being the airline junkie that I am). US Airways, now mighty and strong after being saved by AmericaWest, is trying to gobble up Delta. Delta REALLY doesn't want that - they have a big sign on their homepage that is petitioning their customers to "Keep Delta, Delta." Wowzeers. When I first heard about this proposed merger back in autumn, early November, I thought, "eh, it will never go through, Delta is so hostile to the idea." I imagined this idea would die an early death, as so many other seemingly silly ideas have. Yet, here it is again and it doesn't appear so silly.

Having gone through an airline merger, with perhaps one of these players before (I shall leave it to your discretion, good readers to ascertain which airline was Virginia Gal's beloved previous non-descript employer), I feel I have some idea of what will happen if this merger does go through. And I'll be honest, I think there is a strong possibility that this merger will indeed go through, money talks and US Airways is the biggest bidder. I don't think there will be any anti-trust issues as well.

Without further are my predictions should Delta and US Airways merge:
  • The company will be based in Phoenix, US Airways CEO Doug Parker is a West guy, he was the head of AmericaWest, his loyalities and clout (read government influence) lie there. This means all the poor dedicated long-time employees of Delta in Atlanta will be personas non-grata's. Sad.
  • Right now Delta has three major hubs in the US - Atlanta, Cinncinati and Salt Lake City. Say good-bye Cinncinati and Salt Lake City, they will be downgraded to minor hubs and eventually puttered out. "why?" you ask - ok here is the lengthy explanation.
  • US Airways has four hubs, Charlotte, Philadelphia, Las Vegas and Phoenix. Phildelphia is close enough to Cinncinati and much bigger, with more traffic (re: customers) to boot, hence the departure of Cinncinati's hub status. The one US Airways hub that will get the short end of the stick will be sweet ol' Charlotte - again because of their proximity to Atlanta, no need to have two hubs so close together. Atlanta by virtue of its big city status (particularly in comparision with Charlotte) and as the American gateway for MANY international carriers will remain. Finally on the West Coast, remember Doug Parker is an AmericaWest guy, Salt Lake City is a Delta location, is in the middle of Phoenix and Las Vegas - AmericaWest locations - you do the math. Besides SLC has less traffic than the other two cities.
  • Major labor problems - particularly with the pilots, where seniority plays a large role, aside from the fact that a merger might warrant some lay-offs of certain work groups. That is never a good thing.
  • For the passenger, expect ticket prices to go up, its a simple matter of supply and demand - with less seats on planes, the airlines (all of them) will raise their seat prices.
If this merger does go through and these events do happen, don't forget - you heard it here first!!


Anonymous Anonymous said...

You make very good points, but of course I hope you are wrong...

1:10 PM  
Blogger JoeinVegas said...

Hmmm, first.

10:16 PM  
Blogger Molly Malone said...

wait a second, SLC, Utah is way north of Vegas, not in between. but i do agree, it's more like to get the ax than Vegas or PHX. ATL they'd probably keep, but i can see Cincy and CLT being downgraded to mini-hubs. at least in the case of Cincy, you can argue that it's a midwest hub that can be a gateway in the vein of ORD or MSP. i think you're right about them choosing Atlanta over Charlotte. it'll be interesting to see if and how this all goes down.
Frankly, as a consumer, I hope the sale doesn't go through. i want more choice.

11:01 PM  
Blogger Virginia Gal said...

Anoyn - I concur, I hope the deal doesn't go through either, just cause I feel for the Delta employees, they would most definitely get the short end of the stick. Let's see what happens.

Joe - Yup, first.

Molly - yes, I'd be interested to see if the sale goes through....especially since it would be a hostile take-over. I think Delta-Northwest would be a better deal.

9:59 PM  

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