dutyfree - without for a moment dismissing your hard work over the years, let me respectfully disagree with one of your statements. Airlines actually ARE companies just like Intel, GE or Proctor and Gamble - they take investor money, spend it on operations in the hope of returning a profit. Whether that operation produces computer chips, light bulbs, dish soap, or a service every investor expects a profit and it is the job of management to produce it. That does not justify corporate pirates sucking dry the value produced by the hard work of the rank and file, but it is the reality of any business.
Agree that the best folks to run an airline are those who know how the business operates and not just the accounting books. The reason Continental was able to pull off an amazing turnaround and go from the grumpiest, surliest most unhappy group of employees to where it is today is management led by a veteran pilot who put the cards on the table with employees and flat out said here is what we need to do, and either we do it or we do not survive. To their credit, CO employees took up the challenge, suffered the hard times and ultimately - but not easily - made it to the top.

There is a clear need for consolidation. It won't be pretty for employees or consumers, but the only other choice is to have some of these carriers limp along, squeaking out profits only in boom times, eventually folding up and having the assets sold for pennies on the dollar.

Virtually all of the carriers are stuck between a rock and a hard place. Their profits in the US are being squeezed. The LCCs have lower costs and can fly the same routes for a lot less money. And, nobody is willing to pay more than they have to. It is a commodity industry and the legacies are getting killed.

Of course, this leaves them with only one card left to play, and that is the international one. But, only AA, United, and (to a lesser extent) Delta have enough planes to really play with the big boys in this arena. I mean, look at the number of widebodies operated by the following airlines (in fleet/on order/options):

BA: 120/40/27
Lufthansa + Swiss: 121/47/43
Air France + KLM: 153/47/2
Singapore: 95/84/59
Emirates: 100/177/70
United: 117/0/0
American: 120/7/0 (excludes A300s)
Continental: 46/25/0
Delta: 109/8/0
Northwest: 48/18/50

And this doesn't even adequately take into account the fact that many of the US carriers utilize some of these widebodies on domestic routes, or the preponderance of some smaller widebodies (767s, in particular) among the US carriers. And, remember that the big Euro carriers may only get bigger, with AF/KLM seemingly poised to gobble up Alitalia, Iberia constantly being rumored to be merging with someone, and even the occassional BA/Lufthansa merger bandied about.

Carriers like Continental and Northwest seem to genuinely need to merge, lest they end up slipping to far behind the rest of the industry in terms of destinations and capacity, because they need that international capacity to prop up their domestic operations.

Someday, maybe on another thread, those of you who think consolidation is not only great but needed in the airline industry will explain why you don't think the same thing is even more true for health care coverage.

and health care coverage has to do with travel how???

but since you asked, health related businesses are making record profits, so how are the 2 issues comparable?

"Someday, maybe on another thread, those of you who think consolidation is not only great but needed in the airline industry will explain why you don't think the same thing is even more true for health care coverage."

Despite the completely non-sensical attempt to make this about the politics of health care, this one is easy.

None of the legacy airlines have shown an ability to earn sustained profits over anything approaching the long-term. Since there is nothing suggesting that they will all start making plenty of money, as presently constituted, one must ask how they are going to change. The consensus answer from shareholders to management is that consolidation is the best bet, and I don't see any reason to disagree. Don't confuse accepting the realities of the market place with embracing them.

And, for the record, the health care industry has seen plenty of consolidation, be it drug company mergers/buyouts, hospital group roll-ups, or insurance consolidation. Same market principles at work.

The two industries, in theory, serve the nation's well being and verge on being utilities -- although arguably, health care serves a more universal need than air travel. "Market forces" in health care have resulted so much duplicative bureaucracy and process that the system is nearly collapsing, and a substantial portion of the population is without coverage, which ultimately will have the same effect.

The main difference between the two industries is that one makes money for executives and shareholders while the other doesn't. Reform is therefore impending in the airline industry ONLY insofar as making money is involved; reform of traffic, air traffic control systems, safety, and administrative duplication has not been sufficiently motivating.

And yes, consolidation is happening in health care but, again, motivated by the well-being of the stockholders not improvement of the industry's service to the population paying the way.

What is your logical extension of "consolidation"? Three large airlines? Ten? But not, I'm sure, just one. Yet after a certain point, monopoly is the trajectory of consolidation.

My own response to these airline mergers? Fine, sure, it's inevitable, especially given the skewed way the industry has been treated (regulating what shouldn't be and not regulating what should be, etc.). Employees are going to suffer, as they always do from historical mismanagement. And consumers/passengers are again going to find services, benefits and amenities shrinking or disappearing in the transition. I don't think we'll end up with just 2 or 1 big airline, but we'll end up with the lousy service and high prices that would create, anyway.

I think we're getting some apples and bananas and Toyotas commingled here.

Consolidation of legacy airlines is, in my opinion, not necessarily setting the industry on a monopoly vector. Delta + NW = 1 from 2. Virgin America = 1 from 0. Zero sum. It's a dynamic industry same as any other.

I won't weep for DL and NW morphing into one airline - I'll still avoid NW's old DC-9s regardless of livery, and will continue to try not to frequent Delta's Atlanta hellhole. I will feel bad for small station people in towns where consolidation leads to closure, or for flight crews who have to change cultures, but I already feel bad for disenfranchised or forgotten employees whose jobs have been moved or eliminated, whether it be call centers moved to Bangalore, or washing machine factories moved to Indonesia.

Frankly, as for US "legacy" airlines (think it's time for a new term. How about "old?") and their new brethren facing new realities in the market place, you ain't seen nothin' yet. Two words. Open Skies.

soccr - let's not hijack this thread but also let's not lose the interesting observation. How about a new post in the lounge?
And FWIW, I believe your comments relate not to the health care industry, but the insurance industry.

So if UA + CO merge, will American Express finally be forced to recognize United as a Rewards partner?

"So if UA + CO merge, will American Express finally be forced to recognize United as a Rewards partner?"

This depends upon whether someone else is willing to pay more for exclusive rights to be the partner card. I'm sure Amex would love to have a combined UA/CO, but I'm not sure they will be willing to pay a huge premium.

And, I wouldn't be so eager to see it happen. I have suspicions that the glut of Amex points is a big reason why Delta and Continental generally score so low when assessing award availability. Tough to prove, of course.

Yes, ken, I was just there, at ph (pretty nice). How about you?

Air travel is a commodity and is relatively easy to deliver. If service is cut by mergers then someone else is going to move in. It is inevitable. Whatever gains these mergers might have for other airlines will soon evaporate.

ph=palazzo? swank! hope to check it out end of march.

"Air travel is a commodity and is relatively easy to deliver. If service is cut by mergers then someone else is going to move in. It is inevitable."

Both JetBlue and AirTran are on record as saying they are not opposed to industry consolidation and think it is needed. So, even the littler fish aren't scared, domestically.

I do, however, think that this may bring benefits to the merged carriers. As I noted above, most of these carriers need long-haul capacity to compete with the big (and getting bigger) international carriers. Something like DL-NW helps both carriers come closer to matching the big boys.

No, planet hollywood.

The smaller carriers don't mind consolidation because they will have less competition and they can continue to expand. And there may be a happy time for the airlines but it won't last. The extreme competition that rkkwan mentioned, if it eases up at all, will come back and last longer than the happy time did. That's my prediction.

<i>Whatever gains these mergers might have for other airlines will soon evaporate.</i>,

disagree with the above statement.

1.the mergers will create super sized airlines with healthy financials. If a new US based international start up tries to come on board, the new and improved exisitng airlines will be in a position to squeeze them out by matching anything and everything the new start up will put on the table. Eventually the start up runs out of cash (aka MaxJet just recently and the other 2, EOS and SilverJet still hanging on a thin thread as they are getting hit from both sides of the Atlantic. Perhaps 1 of the 2 will survive at the end but that's not the point here.

2.We're talking about US based domestic/international airlines. There has to be some consolidation or some of them will burn down to the ground(no pun intended) at some point.

3.If some investors decide to invest in a brand new US based domestic/international airline they will think twice before they do it, and I believe that it won't happen for at least few years until the global economy upturns. That gives enough time for the mergers to sort themselves out and make it for a brighter future for the left standing airlines.

1) Is there reason to believe that these mergers would be approved by the U.S. govt? I don't know, I'm asking. The government has been active about preventing a big boy from squeezing out the competition. If USAir and United had merged then maybe neither would have gone bankrupt. But that merger was forbidden.

2) Burn downs happen like Pan Am, Eastern, and TWA. And new airlines emerge.

3) I remember going out to IAD a few years ago to catch flights on United. Practically overnight it seemed that flyi had taken over. That airline burned a bunch of money. But at the same time jetBlue was taking off, more slowly, and have been expanding. If not new airlines then there will be expansion among the existing airlines that will keep the competition keen.

mrwunrfl - The airlines think they have a decent chance of getting clearance from the current administration, less so the next one. That's why there's such a hurry to get this done this year.

And because many think now that the government should have let UA and US merged a few years ago, there's less resistance this time around.

Thanks. Ok, if the 'many thinkers' are in the Justice Dept then I might change my prediction a little.

&quot;Onepass is one of the worst FF program when it comes to perks and availability&quot;

rkkwan, as you know I've switched from Aadvantage to OnePass in the last year. But your statement above has given me second thoughts. I recently took an award trip to Egypt/Jordan and I had no problems getting the tix I wanted from CO/AF. But did I get lucky on that trip? Should I expect more problems in the future?

P_M: Onepass certainly doesn't make it easy for one to use their miles. I am definitely not saying it's impossible, as in the last 3 years, I've helped spent approximately 1million Onepass miles for my family members, and I only have to use SleazyPass (aka EasyPass) awards twice - both for myself, and both are coming back to the US early January from overseas.

But I still think they're harder to spend than other miles. Good news is that it doesn't to have gotten worse. And now with so many partners - DL, NW, KL, AF, etc - the availability is there, but often requires lengthy phonecalls to get them.

And very often, you just have to use a partner, and can't fly on specific CO flights one may want. It's especially true if you want to secure award flights far in advance. CO doesn't release standard awards until about 3-4 months before flight time, unlike the 11 months like most airlines.

I think if you understand the limitations and requirements, it's not really that bad. Like I said, I manage to book so many award flights for all my relatives in the past 3-4 years.