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Southwest announces potential flights from Love Field in gate fight
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HowardBorden
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The DOJ recently released further clarification and justification of the divestiture remedies, here is what they have asserted.
D. Delta Is Not an Appropriate Divestiture Candidate
Delta, while first arguing that the government's theory of liability was flawed, asserts that it should be entitled to acquire a significant portion of the remedy assets, namely slots at Reagan National and the two gates at Dallas Love Field.
Section IV.N. of the proposed Final Judgment requires that the assets be divested to an acquirer or acquirers who in the judgment and sole discretion of the United States 'will remedy the competitive harm alleged in the Complaint.' In response to Delta's request to acquire assets, the United States considered all the facts and circumstances in determining whether Delta should be considered an appropriate divestiture candidate. The United States concluded that divesting assets to Delta would fail to address the harm arising from the merger and would be inconsistent with the goals that the remedy seeks to achieve.
In cases involving allegations of coordinated effects arising from a proposed merger, divestiture assets should not be acquired by firms that are part of the oligopoly. The Complaint describes oligopoly behavior by the legacy carriers (including Delta), such as examples of legacy carriers 'respecting' the nonstop prices of cooperating legacies but undercutting the nonstop fares of US Airways in response to its Advantage Fares program and tactics used to deter aggressive discounting and prevent fare wars. Delta's Comments ignore these specific allegations of coordinated behavior. The allegations of coordination among the legacy carriers fully justify the United States' discretionary decision to direct that the divestiture assets be sold to firms that are unlikely to follow industry consensus, in this case the LCCs. The goal of the divestiture remedy is to enhance the ability of the LCCs to frustrate coordination among the legacy carriers. Allowing Delta to acquire divestiture assets would undermine the effectiveness of the remedy to accomplish this goal and, given Delta?s status as the second largest slot holder at Reagan National, would exacerbate the slot concentration issues at that airport. Delta further claims that an LCC-only divestiture of slots would be 'harmful to competition' as Delta would be more likely than LCCs to serve small- and medium-sized communities, including those communities that New American is exiting. Delta?s argument ignores the substantial benefits of LCC competition, especially with respect to entry at slot-constrained airports long dominated by legacy carriers.
It also ignores the fact that LCCs routinely serve small-and medium-sized communities; indeed, JetBlue has already announced schedules for half of the twelve roundtrip flights it will serve from Reagan National with its divested slots and five of these six new flights will be to small- or medium-sized communities, either to replace service that New American is exiting or in competition with New American. Southwest is likely to serve many more such cities when it announces its
schedule at Reagan National.
Finally, Delta fails to note that none of the proposed markets it claims it would serve with the additional forty-four slots it requests (i.e., over 40% of the total number of Reagan National slots being divested) corresponds to routes New American is exiting. With respect to the divestiture of the Love Field gates, Delta argues that 'no reasonable justification' exists to favor LCCs over Delta. But the point of the Love Field divestiture is for an LCC to offer service at the airport that even Delta recognizes is 'poised to become a highly attractive option for business travelers from across the nation who will be drawn by its proximity to the Dallas city center.' The acquirer of the gates will be able to offer a compelling product to sought-after business passengers who otherwise would favor New American?s service out of its hub at DFW. Obtaining access to Love Field will significantly enhance the acquirer's ability to meaningfully compete against New American, thereby furthering the overall goals of the remedy. In contrast, Delta, given its overall size and scope as well as its presence at DFW, can and does challenge New American for the business of corporate customers flying to and from the Dallas area.
Delta also asserts that it is the only airline that can offer business travelers at Love Field a network of domestic and international destinations, but Delta?s network offerings are not unique at Love Field. United Airlines, which has access to two gates at Love Field, offers a network of locations substantially similar to Delta's. Delta also argues that only it offers a 'premium product' that includes amenities such as a first-class cabin and travelers from across the nation who will be drawn by its proximity to the Dallas city center. The acquirer of the gates will be able to offer a compelling product to sought-after business passengers who otherwise would favor New American?s service out of its hub at DFW. Obtaining access to Love Field will significantly enhance the acquirer's ability to meaningfully compete against New American, thereby furthering the overall goals of the remedy. In contrast, Delta, given its overall size and scope as well as its presence at DFW, can and does challenge New American for the business of corporate customers flying to and from the Dallas area.
Finally, Delta's claim that it will be improperly evicted due to the divestiture is similarly unavailing. Delta currently operates one gate under a sub-lease from American that is terminable on thirty-days' notice. (Another airline, Seaport, sub-leases the otherAmerican gate.) But for the remedy, New American was likely to terminate the subleases and operate the gates itself, an outcome that Delta surely recognizes given the competitive value of the gates once the Wright Amendment restrictions expire in October of this year. Delta, therefore, never had a contractual (or other) right or expectation that it would be able to remain at the American gate. The divestiture does not change this fact.
In the end, the thrust of Delta's position is that its private interests in obtaining divestiture assets should trump the remedial goals of the proposed Final Judgment. Yet, no third party has a right to demand that the Government exercise its discretion in approving divestiture buyers to better serve the private interests of that third party. While a court may inquire into the impact of the settlement on third parties, it "should not reject an otherwise adequate remedy simply because a third party claims it could be better treated."
http://www.justice.gov/atr/cases/f304200/304233.pdf
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DUBLINFLYER
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redflyer65
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dicko
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What Red does is not "debating". What he's doing does sound the same though; if you slur the word and say it real fast.
redflyer65
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waveflyer
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"In cases involving allegations of coordinated effects arising from a proposed merger, divestiture assets should not be acquired by firms that are part of the oligopoly. "
This is key for pilots whether it's in our airlines interactions with govt, public perception or our own contracts-
We are not just in a free market industry- and we cannot act like farmers-
Our careers are very political the roots of which go back to this oligopolistic nature of our business
It also addresses flops concerns, but I doubt he's ever read wealth of nations
This is key for pilots whether it's in our airlines interactions with govt, public perception or our own contracts-
We are not just in a free market industry- and we cannot act like farmers-
Our careers are very political the roots of which go back to this oligopolistic nature of our business
It also addresses flops concerns, but I doubt he's ever read wealth of nations
Should be no reason whatsoever for the idea of common use gates to go away. DAL understands that they don't have to have them (not crucial), but that it's important that SWA does not get them. The idea that DAL (or any legacy) can't participate while one airline gets a clear monopoly is wrong. If an oligopy is bad, so is a monopoly. SWA getting sweetheart deals at Texas airports needs to end.
dicko
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I'm not sure how you made the logical leap from a one liner to defending Flops lunacy. I do think that your post proved my "one liner" to be more than just humor and bordering on prescient. So, I thank you for that.
I agree that Flops rabid myopic defense of CAL and Houston is lunacy. You have much in common. Only the names are changed.
They would look like they look right now: Teaming with different airlines all competing for customers. A true market.
You would benefit by reading the link I showed Bubba. Ft Worth's Greater-southwest Airport. You'll understand the WA Amendment a little more. (Or at least you should, corndog kool aid blurs your vision) Feds weren't going to fund two airports for Dallas and Ft Worth both, so DFW was built. You guys weaseled your way into staying at Love and keeping it open.
DUBLINFLYER
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redflyer65
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This coming from you? Funny, thanks for that.
Have you ever debated any issue on FI? I really don't remember even one. Just BS side shots with no facts. You bring so much cerebral thinking to the site!
redflyer65
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HowardBorden
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If "weaseled your way in" equates to the highest court in the land supporting your legal arguments and unequivocally declaring Southwest's right to remain at Love indefinitely, then yes we we weaseled our way in.
Herb knows he weaseled in.
If Frank Lorenzo got a hold of SWA right now, you'd be in BK so fast your head would spin. If you don't believe that, you don't know your airline history.
Btw: your characterization of what a "fortress" hub is, is way off. Yes, you guys left IAH. You didn't do squat in ATL (after a lot of popping off) Is "fortress" synonymous with: didn't get something handed to you? Or is it: the indigenous legacy wasn't reeling from a corporate raider/calamity?
That doesn't equate to any form whatsoever of the city of Ft Worth "getting screwed." Greater Southwest airport was right near where DFW is now. To the best of my knowledge, nobody wanted to fly there after DFW opened, unlike Dallas Love. The city of Ft Worth gained many tens of thousands of construction jobs over a decade constructing DFW, and enjoys having thousands of its citizens spending the money in Ft Worth that they earned at DFW. Not to mention the tens of millions of dollars spent by passengers who fly there to go to Ft Worth. For that, matter they also get millions of dollars from money spent at DFW by connecting passengers who never actually leave the airport.
The only airlines/tenants that were required to move to DFW were those who voluntarily signed on as party to the agreement, and agreed to move to the massive airport that was being build for them. And every one of those airlines that moved enjoyed the new facilities, and the expansion opportunity that wasn't present at Dallas Love or Greater Southwest.
If Southwest, or any other airline, not party to the agreement to have DFW build on their behalf, had wanted to fly out of Greater Southwest airport, then they could and would have, just the same as Southwest at Love Field. However, none did. By the way, you might have done just a few minutes more of research before spouting off. Greater Southwest airport was essentially dying before DFW was even built. From Wikipedia about DFW: "By the mid-1960s Fort Worth was getting 1% of Texas air traffic while Dallas was getting 49%, which led to the virtual abandonment of Greater Southwest."
Simply listing an essentially abandoned airport that closed in favor of a much bigger airport built essentially right next door, does nothing to further your ridiculous assertion. Try again. The fact is, that the city of Ft Worth has lost nothing by the closing of Greater Southwest, and has gained immeasurably by the opening of DFW.
Bubba
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This is a pretty funny post on your part, because it's obvious to all that you actually know NOTHING about the Wright Amendment whatsoever. Nothing. it must be your hate of Southwest that blurs your vision.
Bubba
This statement of yours is 100%, unequivocally false. Anyone can take anyone else to court for anything whatsoever, if one is willing to fund the lawsuit.
The fact is, that the legal attacks on Southwest before and after the Wright Amendment was passed were part of other airlines' corporate strategy to prevent competition, called "denial of capital." The point is, you make the little guy spend so much in legal fees that he has no more money to operate. Thus, your competition is eliminated. Read up on Legend Airlines and how American Airlines killed them, if you're not familiar with this particular strategy.
Regardless, the other airlines put up BS legal arguments, one after another, in exactly this gambit. Every single one was dismissed by the courts, even to the point where the Texas Supreme court actually enjoined them from even bringing any more legal arguments up. That's how much of a "decent argument" the other parties had--the TX Supreme Ct basically told them to STFU, and not to bother the courts again.
Dude. Seriously. Read up on some actual Texas history.
Bubba
No.
"Fortress hub" is a term describing a mega hub created by a legacy hub-and-spoke airline. Examples: DFW, ATL, PHL, etc. Southwest is a point-to-point carrier, and doesn't use that particular business model. Our largest airport in terms of daily departures is just over 200 per day, whereas American has probably 2,000 departures per day out of DFW (counting its affiliates).
Anything else I can help explain to you, Flop?
Bubba
redflyer65
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waveflyer
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Intercontinental sure is teaming with competition isn't it? What's the number 83% united?
Hobby and love are no different. You just want us at your airport so you can have the advantage.
Why would we give you that?
And I read your wiki- I just don't care. Neither ft worth or love offered a place where AA could fly wide bodies and hub and spoke your legacy code share passengers- so you got governments to build Dfw and IAH - good on you
Doesn't mean we can't fly where we want to do business. We don't need 12,000 runways at our bases. Just because you do doesn't mean we should be forced out to the boonies
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HowardBorden
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I realize that the Texas Supreme Court ruled unanimously in Southwest's favor, but that wasn't good enough and it was eventually pushed farther up until it hit the Supreme Court of the United States which upheld the Texas court essentially invalidating the other sides argument completely.
No my friend, we didn't build what we needed, we built what was needed (public necessity). That's why there were 7 open gates ready for you to use. We are not squandering tax payer money for our own personal business needs, we built a large venue for all. That SWA used to use it [IAH] but could not compete and left, will probably come out in the next few years.
Common use gates seems to be the fairest way to proceed in this case. You agreed to as much at Hobby. Absolutely no reason SWA should control 95%+ of Love flying, right?
Oh that's how it works, thanks your honor. Invalidated the other sides argument? Completely? Interesting... But somehow you still took a big hit settling the WA, how was that?
waveflyer
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