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DOJ tries to block American-US Airways merger
(CNN) -- The federal government and other officials are trying to block a planned merger of American Airlines and US Airways -- a union that could create the world's largest airline. The U.S. Justice Department and attorneys general for six states and the District of Columbia on Tuesday filed a civil antitrust lawsuit challenging the proposed $11 billion merger between US Airways Group Inc. and American Airlines' parent corporation, AMR Corp. The merger "would substantially… (www.cnn.com) עוד...
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BTW I left out Southwest-AirTran, which combined is the largest domestic carrier, with plans to fly overseas too.
So make it 4 mega-carriers to compete with each other, with foreign carriers, and with smaller rivals with lower cost structures and lower prices.
So make it 4 mega-carriers to compete with each other, with foreign carriers, and with smaller rivals with lower cost structures and lower prices.
wut!!!! when are they panning to fly overseas?
SW will be building international hubs at Houston Hobby and Baltimore BWI.
Check it out here:
http://articles.baltimoresun.com/2013-06-08/business/bs-bz-bwi-international-20130606_1_southwest-ceo-gary-kelly-dallas-based-airline-southwest-spokesman-brad-hawkins
Check it out here:
http://articles.baltimoresun.com/2013-06-08/business/bs-bz-bwi-international-20130606_1_southwest-ceo-gary-kelly-dallas-based-airline-southwest-spokesman-brad-hawkins
Air Tran already flies to Mexico and Caribbean destinations as far south as Aruba. Southwest has designs on very profitable South American routes.
I see what you're saying, but barriers to entry are barriers to entry, whether they are caused by government or the free market (which doesn't actually exist, by the way, as you would have learned in your macroeconomics class). There will always be big businesses and small businesses, but big businesses combining with more big businesses to form Captain Planet... err.... Mega Big Businesses serves no useful purpose to an economy.
And we should note that creating niches does not necessarily equate with competition. If Megacarrier One goes here, and Megacarrier Two goes there (especially if we consider Southwest to be a megacarrier), then they are not really competing with each other, and there is little chance of Normalcarrier X will have any chance of providing competition with either of them.
And if we allow the trend to continue... Just look at what Wal-Mart has done to local businesses across the country. Goodbye, grocery store, hardware store, record store, sporting goods store, pharmacy, et cetera. Goodbye, expertise. Hello, mediocre selection of lowest-bidder products. We talk a big game about pulling ourselves up from our bootstraps, but the game is rigged.
And we should note that creating niches does not necessarily equate with competition. If Megacarrier One goes here, and Megacarrier Two goes there (especially if we consider Southwest to be a megacarrier), then they are not really competing with each other, and there is little chance of Normalcarrier X will have any chance of providing competition with either of them.
And if we allow the trend to continue... Just look at what Wal-Mart has done to local businesses across the country. Goodbye, grocery store, hardware store, record store, sporting goods store, pharmacy, et cetera. Goodbye, expertise. Hello, mediocre selection of lowest-bidder products. We talk a big game about pulling ourselves up from our bootstraps, but the game is rigged.
And I'd like to add that we should have learned our lesson about firms becoming Too Big To Fail.
bt, you're all over the place. I'll take each of you're three comparisons separately.
1. Starbucks. You're using a company known for responsibly sourcing their coffee beans, and valuing their workers, including giving their part-tie baristas healthcare, and paying better than the competition. I can't sew how any worker wouldn't want a Starbucks-like airline.
They should open as many stores and keep open as many stores as they can keep full. If some people choose to pay $3 for a cup of coffee, rather than 50cents or a buck, let them. If there are not enough people on a particular corner to justify a Starbucks, let people walk the extra 2 blocks to another Starbucks, or let them buy a 50 cent coffee.
The same with airlines. The major airlines all want a national network, that can serve the needs of any if their most profitable business clients. On top of that they want as many frequencies as they can fly reasonably full. This will make them more valuable to said profitable passengers. But any frequencies that can't be kept reasonably full should not be flown. The airline industry is not a welfare program for passengers, nor a jobs program for workers. As many flights as passengers are wilok hot pay for should be flown. No more. No less.
1. Walmart. No one can claim that Walmart causes prices to increase. The DOJ complaint is based on the idea that consolidation will increase prices. But Walmart is jot a good example of causing prices to increase.
In fact, smaller stores and speciality store often find it difficult to compete with Walmart on price. Those damned consumers always going to the store that gives them low prices, and a huge selection. How dare they be so self-interested!
3. Too big too fail. Now you're really lost. The bigger the network, the more valuable the asset. Not only will the larger network make it less likely that the airline will run into trouble. If they do, you'll have a list of people willing to take over the assets in bankruptcy, and havd a go at it.
Notice how the fight was that US Airways wanted to take over American's assets, and American wanted to continue with their assets as sn independent entity. You'll never have a lack of folks willing to take over a valuable asset. The larger the network, the more valuable the asset.
The only difference is that a financially sound airline is better place to work. Employees can work with less fear of being furloughed, of having their contracts invalidated in bankruptcy court, and having pensions be reduced or eliminated.
1. Starbucks. You're using a company known for responsibly sourcing their coffee beans, and valuing their workers, including giving their part-tie baristas healthcare, and paying better than the competition. I can't sew how any worker wouldn't want a Starbucks-like airline.
They should open as many stores and keep open as many stores as they can keep full. If some people choose to pay $3 for a cup of coffee, rather than 50cents or a buck, let them. If there are not enough people on a particular corner to justify a Starbucks, let people walk the extra 2 blocks to another Starbucks, or let them buy a 50 cent coffee.
The same with airlines. The major airlines all want a national network, that can serve the needs of any if their most profitable business clients. On top of that they want as many frequencies as they can fly reasonably full. This will make them more valuable to said profitable passengers. But any frequencies that can't be kept reasonably full should not be flown. The airline industry is not a welfare program for passengers, nor a jobs program for workers. As many flights as passengers are wilok hot pay for should be flown. No more. No less.
1. Walmart. No one can claim that Walmart causes prices to increase. The DOJ complaint is based on the idea that consolidation will increase prices. But Walmart is jot a good example of causing prices to increase.
In fact, smaller stores and speciality store often find it difficult to compete with Walmart on price. Those damned consumers always going to the store that gives them low prices, and a huge selection. How dare they be so self-interested!
3. Too big too fail. Now you're really lost. The bigger the network, the more valuable the asset. Not only will the larger network make it less likely that the airline will run into trouble. If they do, you'll have a list of people willing to take over the assets in bankruptcy, and havd a go at it.
Notice how the fight was that US Airways wanted to take over American's assets, and American wanted to continue with their assets as sn independent entity. You'll never have a lack of folks willing to take over a valuable asset. The larger the network, the more valuable the asset.
The only difference is that a financially sound airline is better place to work. Employees can work with less fear of being furloughed, of having their contracts invalidated in bankruptcy court, and having pensions be reduced or eliminated.
* Walmart is NOT a good example of causing prices to increase.
While I don't necessarily like being the little guy, what we are seeing here is capitalism at it's best and those driving the train are after it for themselves. Major complaints are now coming from the ones left behind and/or cannot partake of that. Sam Walton had a good idea a few years back and when the stock first started trading in 72, lots of common folks bought it. Since that time, there have been multiple 2 for 1 and even some 3 for 1 splits. After it did, it didn't stay down a month, and now, a lot of those common folks are millionaires several times over, all because they got on the train at the right time. The complaining is coming from those still at the station that don't know that life is not fair.IMHO
I figure it is a negotiating ploy to get concessions from the combined airline on particular airports that have a combined US-Amerixan domination of the market.
Otherwise, they're just a bunch of incompetent government workers, that are allowing politics to have undue sway over their area of regulation. Oversight should be equally applied to all, not applied punitively to some after having given others special treatment previously.