AVSIG: USAir to Buy Delta? wwswsigarch.jpg (7236 bytes)

✈ . . . . . . ✈ . . . . . ✈ . . . . ✈ . . . ✈ . . ✈ . ✈ . . ✈ . . . ✈ . . . . ✈ . . . . . ✈ . . . . . . Touch-and-Go to our Live Forum (This is a Read-only Archive of the 2004-2017 AVSIG Forum)


AVSIG Discussion Sections >> Airlines & Air Crews

sreyoB yrraL
AVSIG Member


Reged: 05/16/04
Posts: 9442
Re: USAir to Buy Delta?
      11/16/06 10:05 AM

Quote:

My problem is that I have not seen an explanation as to why "overcapacity" is the problem nor how cutting the number of airlines will affect it in any fashion.




I have written at length on the topic right here in AvSig.

Just reducing the number of airlines does not necessarily affect capacity. Merging two airlines does tend to reduce it, however, as the duplication in routes is rationalized.

The problem, in either case, is what happens to the excess airplanes? The owners of those airplanes are highly motivated to keep them flying so they will cut deals with other airlines, possibly new startup airlines, to keep them flying. In such cases total capacity isn't reduced, it's just reshuffled from some routes to others. JetBlue was the beneficiary of such a situation when Airbus found itself with a large number of A320s that were no longer wanted. JetBlue was able to negotiate extremely favorable lease rates for their first batch of airplanes.

Airlines aren't setting fares to maintain market share--at least not over the long term. They are setting fares to fill the seats that they have available on a route. Often times the fares that are necessary to fill the seats results in an average fare that is less than cost. The problem is, how do they get rid of those seats?

Parking airplanes is very expensive. In most cases it's cheaper to operate the airplane, even at a loss, because the operating airplane will lose less money than it would if it were to be parked. This makes it very difficult for airlines to reduce capacity over the short term. (It is similarly difficult to increase capacity over the short term) Over the long term capacity can be reduced and has been reduced. We've seen that for most of this year with the majority of Major airlines once again posting profits instead of losses.

Post Extras Print Post   Remind Me!     Notify Moderator


Entire topic
Subject Posted by Posted on
* USAir to Buy Delta? Tom Tyson [SUW] 11/15/06 03:24 AM
. * * Re: USAir to Buy Delta? Robert Mann [HPN-NY]   11/16/06 08:15 AM
. * * Re: USAir to Buy Delta? Richard Duxbury (Dux)   11/16/06 12:04 PM
. * * Re: USAir to Buy Delta? - One Pundit's view Steve Stombaugh (IND)   11/16/06 07:45 AM
. * * Re: USAir to Buy Delta? Stephanie Belser   11/16/06 07:16 AM
. * * Re: USAir to Buy Delta? Bruce Gorrell [EQY]   11/15/06 05:14 PM
. * * Re: USAir to Buy Delta? Don Peters (CMH)   11/15/06 08:28 AM
. * * Re: USAir to Buy Delta? Robert Mann [HPN-NY]   11/16/06 07:40 AM
. * * Re: USAir to Buy Delta? Rick Durden   11/16/06 09:19 AM
. * * Re: USAir to Buy Delta? Robert Mann [HPN-NY]   11/16/06 01:54 PM
. * * Re: USAir to Buy Delta? Ron Natalie   11/17/06 11:43 AM
. * * Re: USAir to Buy Delta? Robert Mann [HPN-NY]   11/17/06 11:57 AM
. * * Re: USAir to Buy Delta? sreyoB yrraL   11/16/06 10:05 AM
. * * Re: USAir to Buy Delta? Rick Durden   11/16/06 10:47 AM
. * * Re: USAir to Buy Delta? Stephanie Belser   11/16/06 09:04 AM
. * * Re: USAir to Buy Delta? Don Brown (ZTL-Retired)   11/15/06 11:29 AM
. * * USAir to Buy Delta? Scott Dyer [HPN/NY]   11/15/06 09:26 AM
. * * Re: USAir to Buy Delta? Joe Budge (W29)   11/15/06 03:54 AM
. * * Re: USAir to Buy Delta? Robert Mann [HPN-NY]   11/16/06 06:36 AM
. * * USAir to Buy Delta? Stephanie Belser-2   11/15/06 04:48 PM
. * * Re: USAir to Buy Delta? Joe Budge (W29)   11/15/06 05:34 PM

Extra information
0 registered and 5 anonymous users are browsing this forum.

Moderator:  Mike Overly 



Forum Permissions
      You cannot start new topics
      You cannot reply to topics
      HTML is disabled
      UBBCode is enabled

Rating:
Thread views: 8950

Rate this thread

Jump to

Contact Us AVSIG

Powered by UBB.threads™ 6.5.5

Logout   Main Index    AVSIG Aviation Forum