When the news broke that Delta was sniffing around the possibility of making a bid for American while it sits in bankruptcy, there were a lot of people shaking their heads, thinking that the mere thought was ridiculous. I couldn’t disagree more. Delta could and should have a real interest here.
What we’re seeing is Delta being really smart, and really aggressive. That’s fun to watch from an airline that used to just be a sleepy old Southerner. The first thing people say about this is . . . there’s no way it would pass anti-trust review. But is that true? I’m not an expert in anti-trust law, but I have no doubt that Delta has been actively working with its lawyers to see what would work and what wouldn’t. If Delta is truly expressing an interest, then it’s done its homework to make sure that it would even be a possibility under the law.
I think the key here is that I imagine Delta isn’t entirely interested in walking away with all of American. Remember when I first wrote about how US Airways should buy American, I suggested that maybe US Airways wouldn’t have much interest in LA or New York? Well, guess who would be interested? That’s right, Delta.
In LA, the market is highly fragmented. I can’t imagine any sort of anti-trust concern if Delta took over American’s operation there. It might even benefit LA by finally building up a stronger single carrier. Sure, the Asian oneworld partners would have a fit, but that’s not Delta’s problem, or the US government’s.
In New York, it might be a tougher sell, but it’s not really that much of a stretch. At JFK, JetBlue carries around 40 percent of the passengers already. So Delta and American combined wouldn’t be a monopoly by any measure. LaGuardia would probably be more of a concern, but the DOT could require some more slots to be auctioned off to low cost carriers and fix that problem right up. I’m sure Delta would be happy to comply if it means eliminating a full service competitor and sprinkling the slots around to other low cost guys.
Of course, this is just one possible scenario, Delta might want Miami as well here, or some other pieces. The point is that the default assumption that the big three airlines can’t combine isn’t true. There are creative ways that they could try to come together with other entities to make a proposal that could work. With American in bankruptcy, it’s really anybody’s game to win, except American’s.
Sure, American could stay as a standalone entity, but the oddsmakers (analysts) aren’t giving that a good chance of happening. When you go into bankruptcy, you lose absolute control of your company. That doesn’t mean that you can’t get out unscathed, but it means that others are going to take a real shot.
Do I think it would be better if Delta bought American? Nah. I mean, I think it’s good to have three large airlines in three separate airlines that can compete with each other. That doesn’t mean, however, that I’m against bits and pieces being moved around to make each remaining airline stronger. But would American be able to survive if Delta took New York and LA?
I don’t see why it couldn’t work if US Airways took the rest. Were I the surviving American in this case, I’d look to buy Alaska Airlines immediately to solidify at least one strong position on the west coast and take that partnership away from Delta. Not sure if that could happen or not, but the point is that there are opportunities for three large airlines to survive even if Delta “buys” American in some fashion.
Will it happen? I have no clue, but Delta would be stupid not to be sniffing around. (And in case you were wondering, United would be stupid TO be sniffing around because it’s hands are very full right now.)
Remember that October snowstorm and the meltdown that followed in Hartford? This woman and her husband were stuck in the thick of it. Here’s a great read about their experiences along the way.
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In late October, my husband and I enjoyed a fabulous vacation in Europe. We managed to see 4 different countries, caught up with friends, and experienced as much as we could in a short time. Little did we know what was in store for us on our voyage home.
Our flight from Paris to New York was circling in the weather when the pilot informed us we were heading to Hartford, Connecticut. We’d been in the air an hour past our arrival time, and the urgency to land was apparent. We finally landed in Hartford, being told we would get back in the air as soon as possible to get to JFK.
My husband and I turned on our phones and checked AA for our reroute. We found ourselves booked out of LaGuardia on Monday morning. It was Saturday. This COULDN’T be right. Angry, I called American and waited on hold for 20 minutes to find out most of the flights at JFK were canceled and Monday was clearly the best they can do for us right now. I was encouraged to call back. Irate, I hung up the phone. My husband and I started to process the information, and to understand the spot we were in. The snow was piling up on the wings. The captain gave updates:
430p: Pilot tells us we will be here for a little while to get refueled and then de-iced 5p: Pilot says we are next in line 530p: Pilot tells us they only have one fuel and de-ice truck working so it will be awhile. He also tells us if we don’t leave by 550p his flight day is done and we have to stay here in Hartford for the night. “In my over 20 years of flying planes I can tell you that I cannot take off with slush on the runway. Folks, I’m looking at an inch of slush on the runway and there is no equipment working to clear it.” 6p: Pilot tells us that we know we are here for the night and still no news on fuel or de-ice. The pilot seems more upset, but tells us the airline is working to find hotels for us.
At this point my husband got angry. The American app on our phone still showed us leaving LaGuardia on Monday morning, so he called American. We had a new strategy and asked about flights out of Hartford on Sunday. He was told the first flight we could get on was around 10p. This seemed absurd to us, he hangs up still angry but feeling better after doing something about it. This was a lesson we learned: Do something with your anger. Don’t sit and stew.
7p: Pilot tells us that there is only 1 international gate here and that there are no customs officials to deplane us. Therefore we have to stay on plane 8p: Pilot tells us that we will be heading to the gate to deplane. 820p: Pilot tells us that he isn’t sure if we’ll get to gate, he tells us getting information out of these people is like pulling teeth 9p: Pilot says we are going to head to another gate and then we will deplane and be held in the terminal area by that gate since we can’t go anywhere until we clear customs 915p: Pilot tells us that we will wait to get the international gate but we can not get off plane until everyone from the Swiss flight in front of us clears customs. All 300 of them.
At this point I was on the phone with American. I booked that flight out at 10p, hoping that when we got on the ground I could make something better happen.
We’d been given snacks and water regularly while we were sitting on the tarmac for 8 hours. The bathrooms were functioning. The mood was patient on the plane, which was surprising. In the row in front of us, a single mom had been entertaining her year-old daughter. This mother had worked HARD all trip, and the baby had been none the wiser of our predicament. We were honestly in awe of her patience and ingenuity to keep that baby happy. Lesson #2: It could still be worse. We were trying to get home to our own children, and could fully appreciate how different this experience would have been if our children were trapped there with us.
1020p: Pilot tells us that we are going to the gate 1025p: Pilot tells us the power is out in the terminal so the gate isn’t working, we will have to exit on tarmac 1050p: Doors open and we can deplane 11p: We enter customs area 1130p: We clear customs — without our bags. Can we even do that? 1140p: We get to baggage area and are told that our bags can’t be taken off the plane because they don’t have equipment at this airport for our size plane and shuttles will be coming to bus us to the other terminal 1150p: We bus over to other terminal midnight: We arrive at terminal to find a spot to sleep 1215a: We are lucky enough to find spot where they are first giving out cots and sheets for sleeping 1230a: We settle in to sleep. Here’s a video of the sleeping situation in the ticketing area at the Hartford airport:
1a: 6’7″ 350 lb Bostonian decides to pull up a cot next to us and shake the windows with his snoring 2a: Windows still shaking and many people are awake 4a: We wake up for the day 7a: We get to American counter.
While in line to speak to the lone American employee, we witnessed some interesting drama. The Europeans from our flight got angry. First a few men were angry at the only employee trying to help us. Then they turned on themselves. A French lady in the crowd started chastising the lead man who was giving the employee a hard time. “It is not her fault!” she told him. The French lady brought calm to the crowd, and we resumed our spaces in line. The man in front of us sat next to my husband on the plane. We knew he was French and was trying to get to Cleveland. He gave the American employee a hard time.
He was put back on our flight, which left for JFK that afternoon, and arrived 45 minutes before his connection to Chicago, where he would then have to figure out his flight to Cleveland. She told him this was the best she could do. We also needed to get to Chicago, and when it was our turn we suggested the same itinerary. She admitted to us that there was no real chance of making that connection and thought our plan to fly from Hartford to O’Hare directly was a better one. She printed our boarding passes to Chicago. Lesson # 3 — being nice pays. We again questioned if we could get our luggage. She confirmed we would be abandoning it to fly home from there.
We took our tickets and passed through security 15 hours early…
11a: See there are 2 spots open on flight to Chicago at 2pm, I call American Airlines and get us booked…We will be home by 4pm 130p: We board the flight 2p: We take off for Chicago… 4p (Chicago Time): We land in Chicago!!!!
After some time had passed, we remembered more of the fabulous experiences on our trip and less about the unfortunate circumstances of our return. The airline had compensated us with vouchers and miles.
We will fly again, we have already booked a trip for the whole family. I will not boycott a single airline, because I saw planes from every airline I could fly stuck in the same predicament. I vow to fly directly whenever possible. We love to travel and experience new places, and this bad experience will not keep us from enjoying our hobby. We will be smart and prepared for our next trip in February. Wish us luck!
– Corry Stanley lives in the Chicago suburbs with her 2 and 4 year old sons, husband of nearly ten years, and two rescue dogs. She’s a native Wisconsinite, lifelong Packer fan, and an IT professional. She tweets infrequently at @corry_s.
What will 2012 bring in air travel? – CNN Out of the Office
CNN asked me to do a look at ahead at 2012, so I got some smart people to tell me what will happen.
American Airlines About to Make a lot of People Much Happier – Conde Nast Daily Traveler
Great news from American this week as it followed in Continental’s footsteps and added “incoming flight” information to its flight status. This is great news.
Delta’s Bag Tracking App: Game Changer? – Conde Nast Daily Traveler
Delta has rolled out a nifty little bag tracking app on the iPhone which builds on the website. Tracking your bag like FedEx is awesome.
In the Trenches: How to Treat the Media – Intuit Small Business Blog
We had a blogger use Cranky Concierge for a trip, and that left us thinking about if we should treat him any differently. (We didn’t.)
It’s been a tough few weeks for American without question. After filing for bankruptcy, it’s probably not a surprise that we see airlines trying to take advantage of the situation by moving in on American’s turf. There were three moves last week in particular that seemed to single out American. I say “seemed” to, because in reality I don’t imagine that any of these were made specifically because American filed for bankruptcy. In fact, I’d argue that one isn’t even targeted at American at all, though it will have an impact. Let’s look at each one.
Spirit Grows Dallas/Ft Worth
Spirit has has now refocused on domestic flying, and DFW is getting a big new spot on the map. This expansion will see one flight per day to Atlanta, Boston, New York/La Guardia, and Orlando. It also announced a day later that it was going to add a daily flight to Mesa (outside of Phoenix) as well.
Let’s be clear on this one: this doesn’t hurt American much. Sure, it has the potential to siphon off some seriously price sensitive travelers on to Spirit, but American shouldn’t be targeting those people anyway. The flight times here aren’t very good with a redeye on the DFW-Boston and Mesa-DFW flights and some mid-day runs on the others. This isn’t going to pull off business travelers in any way, and I can’t imagine Spirit wants to do that. Just as it has tried to do in Chicago and in Vegas, Spirit sees an opportunity to go with super low fares and skim traffic off the bottom.
For Spirit, the timing was perfect. Spirit thrives on using outrageous slogans or promos to get free press. So when Spirit saw American file for Chapter 11 bankruptcy protection, it was too good to ignore. The press release makes that clear with references to a “new chapter in Dallas/Fort Worth’s history” along with $11 fares. You have to love an opportunistic airline. Spirit is like a parasite that lives off the misfortune of others – it’s brilliant.
This really shouldn’t be viewed as much of an assault on American, but many will draw the parallel. And American, like most legacy airlines, has nothing against irrational response so we’ll see where this goes. But American isn’t the only one that’s thinking about these moves. . . .
JetBlue Starts Boston to DFW
Another move that would seem to be more alarming to American is JetBlue’s decision to fly Boston to DFW three times daily. JetBlue has avoided DFW so far, and it has a strong relationship with American, so this might seem curious. Why is JetBlue doing this? I think it’s more about Spirit than American.
Is JetBlue trying to make a move on American’s turf? Well, it is doing that, but I don’t think it’s particularly targeting American. JetBlue stands to benefit through greater cooperation with American after the bankruptcy process wraps up, and it wants to be a strong partner. That makes this seem like an odd move.
And that’s why I think this is more about Spirit. JetBlue has previously been VERY aggressive at tackling ultra low cost carriers. When Allegiant announced it would begin flying from Long Beach to Las Vegas, JetBlue ramped up to offer 5 daily flights in the market and launched the additional flights with a $19 each way sale. Overkill? Yeah, probably. But then again, Allegiant pulled out.
JetBlue has tried a similar move with Spirit. Less than a week after Spirit announced it would do a daily flight from Chicago to Boston, JetBlue added a fourth flight on that route. While JetBlue doesn’t care about competing on Boston to Myrtle Beach and it probably accepts Spirit flying to its home base in Ft Lauderdale, it’s not going to be willing to sit there while Spirit moves in on other destinations. That’s why I think we’re seeing this move.
Delta Steals Gol from American
In a completely unrelated blow to American, Delta signed an “exclusive” deal with Brazil’s Gol to be the only US partner with the airline. That means that American’s current partnership with the airline is going to disappear. Delta paid a pretty hefty price to get in on this – it had to invest $100 million in Gol and now has a seat on the Board of Directors.
While I can’t imagine this has anything to do with American’s bankruptcy (this kind of agreement had to be be in the works long before), I do think it was more about Delta feeling a little desperate about Latin America. Avianca/TACA and COPA will all be in Star Alliance. Though I don’t think it’s been announced, the combined LAN and TAM have to pick an alliance, and the scuttlebutt is that they’re leaning toward oneworld (as they should). That leaves Delta with a messy Aerolineas Argentinas and absolutely no presence in the increasingly important Brazilian market. This was an effort to buy a place in that market, and it’s a place that American likely won’t need assuming LAN brings TAM into oneworld.
So, lots of moves that impact American recently, but it’s not a direct hit, as the title of this post says.
