Site Admin

Joined: 17 Jun 2005
Posts: 949
Location: Carmel, IN

OK. The rumors just aren't dying about airline mergers. UA-CO was even mentioned in the Financial Times recently. And NW-DL has been mentioned in WSJ. The CEO of United has said that he expects some mergers in the industry. The Secretary of Transportation has said he expects some mergers in the industry. So clearly there's something to all this jazz.

So let's tally them up. Starting from 2000, when the Justice Dept. denied the US-UA merger, we had these as our 10 largest airlines, ranked by revenues:

AA
UA
DL
NW
CO
US
WN
TW
HP
AS

Since then, AA bought TW and now HP bought US. If the rumors are true, UA will buy CO and DL will buy NW. That will shrink 2000's top ten list down to 5 - in just a few years.

So if all these rumored mergers happen, the 2000 top 10 list becomes this:

DL-NW
UA-CO
AA (includes TW)
HP-US
WN
AS
TZ
...
And after that, the regionals and smaller LCC's come into play.

From that list, all but AS were serving IND at some point in 2005.

So what does this mean for IND? Well - new airport will open in 2008 when there will only be 5 airlines from among the 2000 top 10 that will serve IND. The whole point of these airline mergers is capacity consolidation. So the combination of airline A and airline B won't equal the number of flights/seats of A+B. It might equal 30% less than A+B. So the number of flights/seats ex-IND will be less. The question then becomes: will other airlines pick up the slack? Probably. But who and how? At the very least, this adds a little bit of uncertainty around the new IND's future.



AA
UA
DL
NW
CO
US
WN
AS
HP
TZ

Site Admin

Joined: 15 Jun 2005
Posts: 2316
Location: Indianapolis, IN

DL-NW would result in a massive bankruptcy in my opinion. Those are two airlines in very bad shape. In all honesty capacity is fine. Loads for the airlines are excellent. What we have plenty of is competition. If we had the exact same number of seats but spread among fewer airlines there would be no problem. I do however think you will see a major airline fail. #1 on the list is Delta. I don't see them making the difficult choices right now to survive. They want to be bankrupt but keep everything they have. They aren't wanting to cut routes. If anything they keep cramming more and more in to ATL which is just going to compound their losses even more. I think NW is playing it much smarter than DL is. DL will crumble and half a dozen airlines or so will move in to ATL and pick up the pieces. I think if any merger happens it will be between CO and another airline. The rest are in no shape to merge with anyone.