Tuesday, January 15, 2008

Wise Words from
the Middle Seat


One of the columns I love to read is Scott McCartney's "The Middle Seat" on the Wall Street Journal's online version. Because of his clout writing for WSJ, McCartney is able to get inside any aviation story, and brings a great amount of accuracy to the many debates swirling around the world of Big Airlines today.

In his 01.15.08 column, McCartney explains why the proposed mergers coming our way from the likes of Delta, United and Northwest could be both good and bad. First, with his permission, let's set the stage:
Some corporate mergers have little effect on customers. But when big airlines merge, it changes life for travelers, leading to higher ticket prices, poorer service and maybe even a switch in the credit card you carry. Airline mergers can mean headaches for travelers. For the fractured airline industry, where nine big airlines fight coast-to-coast, removing large competitors and bulking up flight schedules could be a way to better survive high oil prices and recession instead of the bankruptcies and turmoil of past downturns. That's why Delta Air Lines Inc. may be considering formal merger talks with either UAL Corp.'s United Airlines or Northwest Airlines Corp., and why analysts think multiple major marriages could lie ahead.
I agree with this writer's logic...airline mergers can and WILL mean headaches for you, the airline customer. Consider the following:
Just consider what happened after US Airways Group Inc. merged with America West Airlines. The two carriers now have a stronger network and have seen a boost in revenue they can generate through higher fares and a better mix of business travelers. But consumers have paid a huge price beyond more-expensive tickets. When the two carriers finally moved to a single reservation system, customers discovered some itineraries had been lost and computer troubles led to long lines at airports, widespread flight delays and disruption. America West managers, who took over larger US Airways, have struggled to fix an inadequate baggage-handling operation in Philadelphia that produced piles of lost suitcases during busy times. US Airways on-time performance plunged; customer complaints soared, according to the Department of Transportation. And the carrier still has to deal with its fractured pilots union, where original US Airways pilots are unhappy about how their seniority was affected by integration with the former America West pilots.
One very good point McCartney makes is what mergers might do to our airspace, which is growing more congested by the day:
Mergers also can mean bigger airplanes on some routes if a combined carrier with a larger customer base can substitute a full-size, mainline jet for a 50-seat regional jet. Some transcontinental and international flights could see larger aircraft -- wide-body jets instead of single-aisle planes -- as well. An analysis of a Delta-United combination forecast a 10% reduction in regional-jet service for customers of those two airlines, and about 15 jets worth of additional mainline flying. Such a consolidation of airplanes could help ease some congestion in the skies.
With that in mind, I can only hope JetBlue, Virgin America, Alaska/Horizon and Southwest can jump on some big holes left gaping by the mergers of Big Carriers into Mega Carriers. McCartney sums it up:
Historically, mergers open up opportunity for new entrants and discount airlines that fill in gaps left by service cuts and find new opportunity when bigger incumbents raise prices. One of the biggest beneficiaries of past airline mergers: Southwest Airlines Co., which has expanded in cities affected by mergers and has capitalized on bigger-airline service woes and higher ticket prices. US Airways acquired PSA and AMR Corp.'s American Airlines acquired AirCal to give them intra-California flights, but Southwest dominates those markets today. The latest examples of that opportunistic strategy are Philadelphia and Pittsburgh, where Southwest has expanded as US Airways has contracted.
As I read about these mergers, I wonder how stupid the Big Airlines think we – the flying public – really are. Trust me, it makes no difference what name is painted on the side of the jet, crappy service is still crappy service.

The best way to stay up with McCartney's columns on WSJ online is through their RSS feed. If you don't know about RSS, it is clearly the best way out there on the Internets to stay informed.