Mergers in the Air...Goodness, gracious! We have a lot to talk about this week. United and US Airways have announced they are in serious merger discussions. I honestly think my chances of winning the Masters are greater than the chances of this merger actually happening. The list of reasons why United and US Air cannot pull off this merger is longer than my arm, and I have long arms: [more]
United and US Air attempted this in the late 90s. Finally in 2000 they gave up because of many of the same reasons why this cannot happen in 2010. The unions from both carriers will not let this merger happen. If the unions will not let this happen, it will not happen.
No one knows how the Obama administration will treat antitrust issues, and there will be many. Washington will be the biggest antitrust battleground. United is the dominant carrier at Washington Dulles. US Air is the dominant carrier at Reagan National. Which carrier will have to give up what to make the antitrust people happy?
Which carrier would run the combined airline? Where would the headquarters be?
How can the combined carriers find enough savings to make the deal financially attractive?
Those are just some of the reasons against this merger. Think about these other questions that would be raised if this merger did somehow happen, other mergers followed suit, and I somehow won the Masters.
Would a combined United-US Air then make a run at Continental? I have a hard time thinking Continental wants to be left out in the cold all by itself.
Or is this possible United-US Air marriage just a smoke screen to make Continental want to run to the altar with United?
There is no doubt in my mind that a United-Continental merger would make a lot more sense and would face less antitrust problems. And for some reason I think United and Continental union problems would be a lot less than United and US Air union problems.
Or will Continental just surprise everyone and buy United before the United-US Air talks go any farther? Continental's stock rose 5% on Monday on speculation that they just might buy United.
What will American do? If United-US Air does not happen, does American buy US Air?
What about an American-Continental merger?
What will Southwest do if any of these things happen? Southwest is the only carrier that really has a strong balance sheet, and I cannot believe they want to watch the world around them change dramatically.
And, most importantly, what would I wear with my new green Masters jacket?
A larger merger just happened in Europe. British Air and Iberia have merged creating a very large carrier. We will keep you posted as this saga continues.
BA Loses Millions During Strikes...Speaking of British Air they have lost million in the two strikes it has endured in the past several weeks. The worse news is that there has been no agreement between the carrier and the striking cabin-crew union. We will keep you posted.
Grizz Gets to Stay!And, speaking of mergers and acquisitions, Republic made their big brand announcement today. It looks like they will keep the Frontier brand and animals, and integrate Republic and Midwest operations into the Frontier mix by November of this year, with full brand integrations completed by October 2011. They have
created a website just for the brand integration including a timeline, some links to Frontier commercials, and a fun stuff area that says the next animal in Frontier's zoo will be the badger, in honor of their Wisconsin headquarters. We will keep you posted on what they decide to name the little badger!
Lufthansa Escapes Strikes...Lufthansa pilots have called off plans to strike this week. The pilots and the carrier are headed to arbitration. We will keep you posted.
Results Are on Their Way...First quarter results for the carriers will be posted in the coming days. The results will not be that bad. Several carriers will even post profits.
United Stand-by Fees...United has changed its standby fees: (United's exact words)
"A new $50 charge is being introduced for customers who choose to voluntarily stand by for another flight on the same day as their scheduled flight within or between the US, Canada, Puerto Rico or the US Virgin Islands. This charge, applicable in each direction of travel, will be applied only if a customer successfully boards another flight on the same day as his or her original ticketed flight, beginning on April 28, 2010 when ticketed on or after April 10, 2010."
I had to ask one of our travel experts to interpret the above for this old travel pro. Nancy's translation was much more reader friendly! She says, "Yes, Robert, you can no longer stand by for free unless you are Global Services, 1K, flying on a standard award ticket or refundable ticket. So, in other words, premier travelers and the common man will all have to pay to come home early on those nonrefundable discounted tickets."
Carry-On Luggage Fees...But I do have great news. US Senator Charles Schumer is going to introduce legislation that will stop carriers from charging for carry-on bags. It sure seems to me that the US Senate has much bigger problems than airlines charging for carry-on luggage.
Yes, I think it is downright stupid for Spirit Airlines to even think about charging for carry-on luggage. (Carry-on that would fit under your seat would be free. How on earth would you make those logistics work? Spirit was the first carrier to charge for checked luggage in 2007.) But I think the market should decide with their travel dollars if this is a stupid idea. And, furthermore, it is not like the airlines are posting obscene profits from all of these additional fees they are now charging. Congress should be much more worried about much more than airline fees. This is a great big, "Goodness, Gracious!" to me on both counts.
Robert Polk is CEO of Polk Majestic Travel Group in Denver. These insights are excerpted from Robert's weekly newsletter, From the Desk of Robert A. Polk.