DOT votes against modified Delta-USAirways swap agreement - socialism???

[General Lee]

I read it and I'm still can't understand why you have your panties in such a wad. Beck's appendage must be blocking your oxygen supply. They want to trade 167 slots. The DOT says they have to sell 34 of them, big deal.

I don't think you get it. These assets are owned by the airline. SWA could have tried to get slots years ago but chose not to. Now, they want them when it is convienent for THEM. The only time the GOV'T tells YOU who to sell your house to is when it is up for auction at a forclosure. Again, DL and US don't have to do anything, and that means more people in smaller towns in Upstate NY won't get any service to LGA when USAir pulls out entirely. They want out. Most of the slots were going to be used by DL to fly larger planes (RJs versus current Saab 340s) to places like Ithaca, NY. I don't think SWA wants to go there, yet. Oh well, people in those towns will lose the most I guess.


Bye Bye--General Lee

 

[bmpilot]

It appears to me Delta doesn't want the slots to go out on the freemarket. They want Government protection on what they do with them. If you want a freemarket, let them go to the highest bidder, period. That's capitalism.

Don't be surprised if SWA wanted part of that and Delta didn't want them playing.

 

[UALRATT]

Some good points on both sides of the argument. Understand completely why DAL/LCC want to control who they wish to compete against. Other low cost carriers that control less than 5% of pax traffic vs one (SWA) that has 15% is a solid reason to limit the exposure.

Every airline would like to choose who it can compete against. What should the gov. do in such situations?

The DOT has spoken and DAL/LCC always has the option to nix the entire deal and stay with status quo. If that is better than the alternative and not good for the shareholders, then go for it.

Lets recall the US Gov gave out $15B to the airlines in 2002 after 9/11....some would argue that capitalism wouldn't have allowed that to happen.

"The measure gives the nation's airlines $5 billion in immediate cash assistance and $10 billion in loan guarantees in an effort to keep several major carriers from collapsing. Sen. Peter Fitzgerald, R-Ill., was the only senator to vote against the bill." http://archives.cnn.com/2001/US/09/21/rec.congress.airline.deal/

The two airlinles involved have both gone through bankruptcy.

Some would argue that true capitalism would have had the companies dissolve since they were unsuccessful in the competitive market place. Bankruptcy laws, most would agree I believe, have some very anti-captialistic elements to it (making businesses repay money to bankrupt companies up to 90 days after being paid is just one example that led many other companies into bankruptcy...I'm just saying...)

It is obvious what DAL/LCC want to do....increase profits and improve their efficiency while at the same time limiting their exposure to more competition. Is that the free market system?

It is not black and white and the courts, as is often the case, will make the call and with SWA (Herb) arguing on the side of more competition, that is a side that most people can understand and get behind. I'm not saying SWA should get all of the slots but the DOT obviously feels a blind auction is better than what was proposed as an alternative by DAL/LCC.

No offense directed toward others at DAL, LCC or others who have different opinions.

Good post! Just to clarify the government only approved $15B including $5B in cash reimbursement for the airspace shut down, most of which was distributed to 427 U.S. air carriers but the ATSB approved loan guarantees to six airlines totaled a mere fraction of the remaining $10B+; approximately $1.6 billion. Hence the wave of bankruptcy. It should be noted that government not only recoup the $1.6B but profited $339 million from the interest and fees associated with $10b loan guarantees.

 

[General Lee]

Don't be surprised if SWA wanted part of that and Delta didn't want them playing.

There is no doubt there, and if you owned something, you can also decide who buys it if you want to sell it. The key here is that DL and USAir bought those assets, while SWA had a chance to also. At the time, SWA didn't want to go into larger airports, opting for Manchester, NH, Providence, RI, and BWI, for pax "convienence." Well, now they want more.


Bye Bye--General Lee

 

[Cometman]

There is no doubt there, and if you owned something, you can also decide who buys it if you want to sell it. The key here is that DL and USAir bought those assets, while SWA had a chance to also. At the time, SWA didn't want to go into larger airports, opting for Manchester, NH, Providence, RI, and BWI, for pax "convienence." Well, now they want more.


Bye Bye--General Lee

If Delta goes with this plan then SWA will probably get to buy them. When you sell your house you cannot eliminate a buyer because of his race religion etc. Just like you cananot pick who you want to compete with.

 

[UALRATT]

I give up, what is the definition of Socialism in the minds of the enlightened? If someone try's to tell me that socialism means something other than a contrast to Capitalism, then I become skeptical. This actually reminds me of a quote by Nikita Khrushchev, a leader of the Soviet Union during the Cold War: "We can't expect the American People to jump from Capitalism to Communism, but we can assist their elected leaders in giving them small doses of Socialism, until they awaken one day to find that they have Communism."

I wouldn't call you a Nazi, either. I would consider the Nazis a fascist group, and a group who was actually against socialism. Don't let their name (Nationalsozialistische Deutsche Arbeiterpartei) fool you. And don't let me read your history books.

Back to topic: I'm not sure what the DOT's definition of anti-competitive is. Maybe they read the same books and watch the same TV shows that DASHDRIVER does? If losing tens of billions of dollars over the last decade, while trying to stay alive in this business isn't cut-throat enough, then I don't know what is. I'm not too sure how we are going to attract bright, successful and innovative people and businesses to come to this country (or stay here) if they are told how much money they are allowed to make... if any at all.

...not to trying to be a stick in the mud, but this country is going downhill.

Dusty, like he said you'll misunderstand his post. You never quite address the point he was making that this country is not a true democracy or a purely Capitalist state, and at no time in our histroy have we ever been. Regulation serve to keep the marketplace organized rather than a chaotic loudfest and has nothing to do with Nik Khrushchev who himself sought to open up commerce with the capitalist west until the U2 / Francis Gary Powers incident. Chest thumping and this 'ism argument is far from the subject of this post and just a downright pathatic excuse for where we are a nation today...

 

[Dan Roman]

I think that the people who are throwing the word socialism around on this thread should stop listening to Beck, and Limbaugh and pick up a book and read what socialism actually means. You may not like what the government is doing, fine. I don't agree with all of it either. But its not Socialism, and we are not a true democracy or a pure Capitalist state. We never have been. At best we are a Democratically elected Social Republic. We've been that way since day one. Seriously, stop watching Fox News and pick up a history book. Preferably one not published by Ruport Murdock.

I think most of the people who are the most angry at Obama and the government are venting it in the wrong direction or don't understand what is going on and how we got here. Obama didn't set up the rules for deregulating the airlines. He also has not influenced the way the anti-trust laws have been writen for 100 years. He also has no significant apointments put into the DOT since his election.

I don't even know why I am bothering to say this. In the next post somone is just going to acuse me of trying to take there guns, or call me a nazi or something and completely miss my point.

Add me to the list that thinks this is a good post. I guess those pilots that lost their pensions to unbridled capitalism and now have to depend on Social Security and the PBGC are socialists according to some on here!

 

[redflyer65]

It's pretty simple. Delta and US Air wanted a straight swap. The DOT says Hold On, you must divest a certain amount.

Delta comes back with a divesting plan for HANDPICKED airlines. That's were the problem comes in. Delta doesn't want certain competition if they can keep people at bay. I can't say I blame them for trying, but it kinda goes agains what the DOT had in mind.

Plus, they picked WestJet as one of the new airlines while they get ready to ink a codeshare deal with them. Interesting...

 

[johnsonrod]

It's pretty simple. Delta and US Air wanted a straight swap. The DOT says Hold On, you must divest a certain amount.

Delta comes back with a divesting plan for HANDPICKED airlines. That's were the problem comes in. Delta doesn't want certain competition if they can keep people at bay. I can't say I blame them for trying, but it kinda goes agains what the DOT had in mind.

Plus, they picked WestJet as one of the new airlines while they get ready to ink a codeshare deal with them. Interesting...

Two new market entrants: JB in DCA and Westjet in LGA. That's better than no new entrants. If the deal caves because the Gov't decides how they want companies to compete and how companies exchange their assets, then the public gets no real benefit and we're back to status quo. This is called an overextension of regulation. And we all know Obama and his cronies want to regulate everything because the "Government knows best."

 

[DustyBottoms]

Dusty, like he said you'll misunderstand his post. You never quite address the point he was making that this country is not a true democracy or a purely Capitalist state, and at no time in our histroy have we ever been. Regulation serve to keep the marketplace organized rather than a chaotic loudfest and has nothing to do with Nik Khrushchev who himself sought to open up commerce with the capitalist west until the U2 / Francis Gary Powers incident. Chest thumping and this 'ism argument is far from the subject of this post and just a downright pathatic excuse for where we are a nation today...

DASH is right, this country has been going downhill for a long time, and long before Obama. No nation can remain on top forever. Don't assume I'm an "alternative media" junkie just because I feel that people should be awarded for how productive they are. And I would never assume that every, or even most, successful entrepreneurs would leave their home countries for one that has more favorable regulations.

As far as addressing the point he was making, that this country is not a true democracy or a purely Capitalistic one, I completely agree. I also think that it never should be, or that any country ever should be. People in this world aren't informed enough (some more than others), or even care to vote on everything directly. That's why a representative democracy works better. Same thing for Capitalism; most people don't perform due diligence and need some government protection from corporations, as well as themselves. As far as what the balance needs to be to make a nation its best... hell, I don't know.

As far as how this all pertains to the swap deal, I'm just a little curious as to what the Government thinks it can do to make this industry more competitive. Airlines have been bleeding money for over a decade, trying to stay alive. Here we have Delta and US Airways saying that this deal will benefit their bottom line, but the government is worried that they might move closer towards the black because of it?

I'm the type of person that holds myself responsible for my actions, and I don't try to find blame in someone else for any mistakes I make. If I spill hot coffee on myself and get a second degree burn, I won't sue someone else, I'm a dumb ass. If I shoot a hole the plane with my FFDO gun, I won't go blaming procedures for my error, I'm a dumb ass. When getting close to retirement, and my savings gets chopped in half because I had 80% of it in equity securities when the stock market crashed, I won't blame corporations or the government, I'm a dumb ass. I guess this line of thinking labels someone as a trailer-trash-FOX-watcher these days. I'm actually not... at least the FOX watcher part, anyway.

 

[Schwanker]

What is Socialist about a blind auction where the highest bidder gets the slots. That's Capitalism at it's finest, and if I was a DL or US Shareholder I would insist that these two Airlines get the highest price they could get on the OPEN market.

The govt chooses the bidders. Real open market.

BTW, the slots already went up for bid and DAL/LCC were the highest bidders.

 

[puddlejumper101]

once again, these slots are RENTALS. Last I checked USAirways and DAL did not own LGA or DCA. They are renting those slots, and can be considered assets to a certain degree...rented assets. It's all fine and dandy until you want to trade, sell, or give up your slot. To think that the landlord would not get involved is ridiculous, especially when there is demand for those slots. Bottom line, who owns the slots. Not the airlines, they never did. Like I mentioned earlier, who owns your house...the bank and the Gov't. We pay property taxes don't we? Nothing more than the rental for the land your house sits on. The landlord is just listening to both sides, if there was no demand for these slots (especially by SWA) then there would be no issue. If nothing else SWA just forced DAL and USAirways to overpay for those slots, much the same way Republic overpayed for F9. SWA is a master at this, they may not even be interested in the slots, but by making a stink they are making sure whoever ends up with them payed quite the price for them. It's a win win for SWA.

 

[FlyinPiker]

once again, these slots are RENTALS. Last I checked USAirways and DAL did not own LGA or DCA. They are renting those slots, and can be considered assets to a certain degree...rented assets. It's all fine and dandy until you want to trade, sell, or give up your slot. To think that the landlord would not get involved is ridiculous, especially when there is demand for those slots. Bottom line, who owns the slots. Not the airlines, they never did. Like I mentioned earlier, who owns your house...the bank and the Gov't. We pay property taxes don't we? Nothing more than the rental for the land your house sits on. The landlord is just listening to both sides, if there was no demand for these slots (especially by SWA) then there would be no issue.

http://law.justia.com/us/cfr/title14....1.3.11.13.9.7

Read it. Airlines have every right to swap, sell, or whatever with their slots. The DOT/FAA wrote it.

Your landlord analogy is no where close. The DOT's power to object to a transaction is not suppose to have anything to do with whether there is a demand for the slots. Or whether an alternate airline could serve the markets needs better. They are only allowed to object if the transaction will "hurt" things.

If nothing else SWA just forced DAL and USAirways to overpay for those slots, much the same way Republic overpayed for F9. SWA is a master at this, they may not even be interested in the slots, but by making a stink they are making sure whoever ends up with them payed quite the price for them. It's a win win for SWA.

I don't understand what you are saying here. Who is DAL and Airways overpaying ? They have the slots already. They do not have to buy them back. These slots aren't up for grabs. They are still the possession of DAL and Airways.

 

[Tejas-Jet]

If this scuttles the deal, how will the public benefit from the status quo? What other requirements should the Government IMPOSE on these deals? The deal had already been modified to the extent that completely new entrants were added to DCA and LGA.

It really isn't the Govt imposing as much as it is Southwest Airlines and their crack legal team calling out this deal. How nice is it that Delta/US Airways get to decide who they are gonna compete against. Not only that, but, how nice that they never offered those slots to SWA.

got news for you, buddy....Southwest made this happen, not Obama.

How much more should Obama's people intrude? What's next? DAL won't get Haneda slots in Japan if they don't hire more Comanche Indians? Too much intervention and meddling = socialism in my book.

"Selling" slots to much smaller competitors and not allowing a company like Southwest to buy those slots at a much, much higher price than Westjet or Spirit can afford is cheating the shareholders and employees at both Delta and US Airways.

Also, lets not forget the all-important Customer. Doesn't the Customer deserve more choices at both DCA and LGA ? With an effective competitor ? One who doesn't charge bag fees ?

And, remember ( for all you patriotic guys out there) ...it is competition that makes us better. The better the competition, the higher we raise our level of play. It is the American way. Americans LUV a good, strong, competitor...always have, always will.

Surely Delta and US Airways aren't afraid of a good, strong competitor ?

Maybe this whole discussion is just another excuse to use the word....socialism.

 

[SWA/FO]

At best we are a Democratically elected Social Republic. We've been that way since day one. Seriously, stop watching Fox News and pick up a history book. Preferably one not published by Ruport Murdock.

:beer: Yeah baby! What if DAL/LCC say "we dont want to trade" Are they locked into this now that they have shown their cards? Or can they fold? Shows you how much $$$$ can be made in both those airports. Southwest can smell it, and we will get some of that action, we always do...except for F9, they saved the animals. :nuts: