Continental Airlines Inc. Chief Executive Officer Jeff Smisek defended a proposed merger with UAL Corp., testifying in federal court that combining the airlines will “increase our revenue and decrease our costs.”
Read the rest of the story from Bloomberg News.
House of Representatives Transportation Committee Chairman James Oberstar is on a tear. Last week the Department of Justice approved the merger of United and Continental airlines.
Air Transport World reports, “Oberstar said in a statement that DOJ “had little choice” but to approve the UA/CO combination owing to the “very narrow set of criteria” current US law allows it to use to make judgments on airline mergers. He said there is a “need to give broader authority over such mergers to the Department of Transportation, allowing DOT to consider such factors as the impact a merger will have on service to communities and customers, as well as the effect the merger could have on the industry as a whole.”
Read the rest here.
Last week the U.S. Justice Department gave its blessing for the merger of United and Continental airlines. This week mergers details are emerging. The Houston Chronicle reports the merger is expected to be a done deal October 1. But it will likely be May of next year before customers start to notice differences.
Read the rest of the story here.
10:20 am
Guy has thoughts and questions:
“With the United / Continental merger do you think we’ll now get air service to Newark? Also, What are your thoughts . . . I predict Cleveland will go the way of STL, PIT, CVG with Denver soon to follow. San Fran is a far superior western outpost for the now combined airline.”
Service to Newark? Not a chance. That’s because the merger won’t change a very basic fact: Springfield is a small air market in the center of the country.
From the airline perspective there isn’t enough demand in Springfield to justify service to any one NE city. So what do airlines do? They collect passengers from small markets, like Springfield, and fly them to large hub airports. At the hub, small market passengers are, in effect, collected and deposited on bigger airplanes and flown to NE destinations. Most travel to the NE, from Springfield, is done through the hub airports in Chicago, Memphis, Dallas, or Atlanta. This is called the “hub and spoke system.” Our airport is a spoke.
As for your thoughts about the combined airlines’ hubs…
Yes, Cleveland will see a reduction. But Denver? No way. That’s the sort of scenario that occurs only in the dreams of Frontier Airline executives…
Just over a month ago we were speculating about a possible merger of United and U.S. Airways. Those merger talks were going hot and heavy when the plug suddenly got yanked. The next think you know United is standing at the alter with Continental. Wow…it’s the sort of drama that goes on at high school proms!
So what does it mean for our airport? Before diving into that, keep in mind that this marriage must be approved by the federal government. Will a Democratic administration be as receptive to an airline merger as a Republican one (Republicans were in charge when Delta and Northwest merged a couple of years ago)?
Assuming the deal is blessed by the feds, let’s look at what the two airlines bring to the table. This discussion will mainly deal with just North American operations:
United:
Continental:
Check out the North American route maps: United and Continental.
The first thing to point out is that both airlines are members of the Star Alliance. So some Springfield customers are already taking Continental via code share with United.
As for hubs, it seems doubtful that there will be much change, except for Cleveland, which could be pared back.
The most obvious question concerning Springfield is whether the combined airline will start service between Springfield and Houston? That will depend on at least two things: 1) will the new airline’s analysis of Springfield traffic justify the service, and 2) will the new airline want to compete with American for Springfield customers that currently connect through Dallas on their way to smaller Texas cities? That’s an oversimplification, but it gives you an idea of the questions the airline will ask.
Bottom line? Barring a huge restructuring of the airline’s combined networks, we don’t see much change on the horizon.
For the second time this year Delta Airlines is dropping our service to Minneapolis. The one-trip a day service ends on December 14. The service was dropped for six weeks late last summer, but was brought back based on strong advanced fall bookings. The latest word indicates that the route performed poorly in October and November, so it’s been pulled again.
While the airline isn’t saying so, there’s little doubt that this is more fall out from the merger of Delta and Northwest airlines. Before the merger Delta and Northwest provided us with service to Memphis, Detroit, Cincinnati, Minneapolis and Atlanta. Since the merger we’ve lost Cincinnati, Detroit, and now Minneapolis.
These losses can’t be blamed entirely on the merger, though. When one combines the business realities of the merger, along with the triple whammy of the world-wide recession and unstable fuel prices, well, what do you get? Cuts in service.
Okay. Having said all that, we hate to count our chickens before they’re hatched, but there appears to be a chance that the service will come back next year. A quick trip to our terminal travel agent was revealing. It shows that you can book a flight between Springfield and Minneapolis in May. Keep your fingers crossed, a lot can happen between now and then!
Last week United’s CEO was chattering about the possibility of a merger… This week it’s the president of Continental Airlines, Jeff Smisek. He’s chattering about the possibility of merging with United.
FYI…Last year United and Continental flirted with the idea of merging. Talks broke down when United’s poor financial status became clear.
A full year after the two airlines merged, the Delta and Northwest frequent flier programs are now one.
“The changeover means that Northwest frequent flier members have had their WorldPerks converted to SkyMiles and will have SkyMiles issued to them in the future for eligible travel and credit card purchases…”
Read the rest of the story from the Chicago Tribune.
Let’s start with good news, then move on to the bad…
After six consecutive months of double digit passenger declines, we’re relieved to report that March passengers numbers were down only one percent. This improvement brought our yearly decline from minus 14 percent, to minus nine percent.
Why the improvement? I’d like to say it’s the result of an improving economic situation—but I’m not going to be that bold. It has much more to do with Allegiant Airlines and its seasonal addition of more flights. In March, Allegiant numbers were up 55 percent over the same month last year! March numbers for the other airlines were all in negative numbers. Delta led the pack: down 24 percent for the month.
The declining passenger numbers do have a bright side: in an attempt to sell more seats, the airlines are cutting the price of fares…and not just fares between major hubs, or hubs and foreign capitals. Example: American is now offering some seats between here and Dallas for $200 or less. A couple of days ago I talked to a Springfield chamber member who tracked down roundtrip fare between here and Dallas for $150. That includes taxes and fees. So good news for customers, but I dare say bad news for the airlines. Today American reported a first quarter loss of $375 million.
And now some bad news…
We found out on Monday that we’re losing Delta service to Detroit, effective May 1. Delta planners tell me that they had planned to continue the service, but last minute schedule changes effectively left our market without a plane to service the route. The planners say, “they might bring the service back, but we can’t give you a time frame.”
It’s probably not a stretch to say this is further fallout from the merger of Delta and Northwest (the Detroit service was on Northwest). On the other hand, we’ve known for some time that this service was on the bubble. There was just one arrival and departure every day; very early in the morning and very late at night. And the high cost of fare didn’t help either.
Doug Pitt, past chair of the Springfield Chamber, and Gary Cyr, director of the Springfield Airport, announce the new service to Los Angeles
Yes, it’s true. Beginning May 3 Allegiant Air begins non-stop service between Springfield and Los Angeles International Airport. The introductory fare is $99 one way.
The new destination means that five of Springfield’s 13 destinations are now provided by a low-cost airline: Allegiant.
When the service begins it will be the airport’s first regularly scheduled flight to the West Coast. It will also be the longest regularly scheduled flight in the airport’s history: 1,425 miles.
From a “big picture” perspective, the new service is very important—when you look at a map showing our destination cities, there are two obvious gaps in our service: the upper East Coast and the West Coast. The new LAX service will fill that West Coast gap.
_______________________________________
February 20 Follow-up
Greg wants to know where else Allegiant might be flying soon?
“This is great to hear as I love whenever we have a new destination. Just curious what cities do you foresee Allegiant going to in the future. I heard rumors of NYC area airport, Myrtle beach and a Mexican city.”
Since becoming a publicly traded company, Allegiant has said the following in several documents filed with the Securities and Exchange Commission:
We, too, have heard the speculation about New York City and the Caribbean. Hope it’s true!
