General Lee
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US Air-Delta deal could mean higher ticket prices
Wed Nov 15, 2006 5:50pm
By Bill Rigby
NEW YORK, Nov 15 (Reuters) - US Airways Group's (LCC.N: Quote, Profile, Research) proposed $8 billion deal to buy bankrupt rival Delta Air Lines (DALRQ.PK: Quote, Profile, Research) makes sense for the airlines, but may not be such good news for passengers, industry-watchers said.
The proposed deal, put forward by US Air earlier on Wednesday, would help the merged airline cut costs and expand its network, but would likely mean fewer flights on some routes, and higher ticket prices. "If carriers have overlap, there's typically a reduction in service," after a merger, said Stuart Klaskin at KKC Aviation Consulting. "The less service that's available, the more scarce the commodity -- seats. Therefore, there's room for upward pressure on pricing."
That means passengers buying a ticket on a route offered by both US Air and Delta -- such as New York to Las Vegas -- would likely have fewer flights from which to choose as the airlines streamline their service.
That could mean a significant reduction in flights overall, especially on the U.S. East Coast, where the carriers overlap in places such as Atlanta, New York, Charlotte, Philadelphia and Pittsburgh, analysts said.
On the upside, passengers may enjoy a widening of destinations via connecting flights, if US Air links up with Delta's much larger international network.
"There's also typically an expansion of destinations or network service," after a merger, said Klaskin. "You may lose some flights to certain destinations, but you'll have more connecting possibilities from the hubs. The network grows while the service typically decreases." PRICING POWER Continued...
Great publicity for NOT allowing a merger....
Bye Bye--General Lee
Wed Nov 15, 2006 5:50pm
By Bill Rigby
NEW YORK, Nov 15 (Reuters) - US Airways Group's (LCC.N: Quote, Profile, Research) proposed $8 billion deal to buy bankrupt rival Delta Air Lines (DALRQ.PK: Quote, Profile, Research) makes sense for the airlines, but may not be such good news for passengers, industry-watchers said.
The proposed deal, put forward by US Air earlier on Wednesday, would help the merged airline cut costs and expand its network, but would likely mean fewer flights on some routes, and higher ticket prices. "If carriers have overlap, there's typically a reduction in service," after a merger, said Stuart Klaskin at KKC Aviation Consulting. "The less service that's available, the more scarce the commodity -- seats. Therefore, there's room for upward pressure on pricing."
That means passengers buying a ticket on a route offered by both US Air and Delta -- such as New York to Las Vegas -- would likely have fewer flights from which to choose as the airlines streamline their service.
That could mean a significant reduction in flights overall, especially on the U.S. East Coast, where the carriers overlap in places such as Atlanta, New York, Charlotte, Philadelphia and Pittsburgh, analysts said.
On the upside, passengers may enjoy a widening of destinations via connecting flights, if US Air links up with Delta's much larger international network.
"There's also typically an expansion of destinations or network service," after a merger, said Klaskin. "You may lose some flights to certain destinations, but you'll have more connecting possibilities from the hubs. The network grows while the service typically decreases." PRICING POWER Continued...
Great publicity for NOT allowing a merger....
Bye Bye--General Lee
