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Old January 7th, 2006, 12:43 PM   #121
pricemazda
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Exactly it would be commercial suicide for BA and Virgin if the UK govt allowed greater competition at Heathrow without the restrictions in the US being lifted at the same time, but Congress will never do that. The gross unfair subsidies in the forms of direct payments and chapter 11 protection for extended periods mean US Airlines are not subject to commercial pressures that profitable BA and Virgin are.
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Old January 7th, 2006, 03:28 PM   #122
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Who had the Bermuda II rights before Virgin?
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Old January 7th, 2006, 06:13 PM   #123
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Quote:
Originally Posted by samsonyuen
Who had the Bermuda II rights before Virgin?
Before Richard Branson sued his own government to allow Virgin Atlantic to fly Transatlantic routes and operate at Heathrow, only three airlines had the right under B2 to do so: British Airways, PanAm and TWA.
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Old January 7th, 2006, 06:49 PM   #124
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^Thanks. It makes more sense to have two and two. How come more airlines haven't sued to get these rights, like Delta or bmi?
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Old January 7th, 2006, 08:12 PM   #125
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Originally Posted by samsonyuen
How come more airlines haven't sued to get these rights, like Delta or bmi?
In November 2003, Bermuda II was found to be illegal by the European Court of Justice. British Midland has petitioned both the US and EU to reach an agreement on Open Skies. The last I heard of news regarding talks was November, so they're still negotiating. So to me at least, it appears airlines are pushing for diplomacy rather than another court battle.

However, even if B2 is thrown out, the bigger issue of departure/landing slots at Heathrow remains a hurdle to any airline wanting to start new service from that airport. British Airways has bought up about 42% of all available slots, and some feel BAA should revoke all the slots and auction them to the highest bidder.

Basically, airlines like bmi would be able to start flights to the US from Heathrow with B2 gone, but very few others will benefit from it unless Heathrow is dramatically altered.
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Old January 7th, 2006, 08:21 PM   #126
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That isn't going to happen until the US has open skies itself and stops subsidising its airlines and allows foreigners to own US airlines.
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Old January 7th, 2006, 08:40 PM   #127
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Originally Posted by pricemazda
That isn't going to happen until the US has open skies itself and stops subsidising its airlines and allows foreigners to own US airlines.
Right. I feel like the US is trying to get its major airlines back on their feet, but the process isn't fast enough to help them face the next major challenge (like high gas prices), so the cycle continues.

I think Delta could use a little outside ownership to help get them rolling.
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Old January 7th, 2006, 08:44 PM   #128
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But while the US preaches free trade and liberal economics to the rest of the world, its quite happy to protect its own industry (airlines, steel, farming, boeing). It shouldn't be trying to get its airlines back on their feet, it should let them go bust. It sink or swim.
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Old January 9th, 2006, 01:05 AM   #129
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http://www.bizjournals.com/industrie...a_daily22.html
Atlanta Business Chronicle - 10:48 AM EST Thursday
Delta continues international flight expansion

Delta Air Lines Inc. will launch this summer its inaugural non-stop service between New York and South America.

Pending government approvals, the Atlanta-based bankrupt airline (Pink Sheets: DALRQ) will link New York's John F. Kennedy International Airport with South America's largest city, Sao Paulo, Brazil, starting June 1.

The addition of non-stop flights between Delta's hub at New York-JFK and South America is the latest in a series of moves to expand its international flights. Delta's new flights between New York and Sao Paulo will add to the 21 transatlantic destinations served by Delta from New York, including four new non-stop routes planned for summer 2006: Budapest, Hungary; Dublin/Shannon, Ireland; Kiev, Ukraine (subject to foreign government approvals); and Manchester, England.

"Delta already offers New York customers the most service of any U.S. airline across the Atlantic, the most domestic capacity from New York's LaGuardia Airport, and the city's leading shuttle product to Washington, D.C. and Boston," said Glen Hauenstein, Delta's executive vice president of network and revenue management. "The addition of daily, non-stop service from New York to South America's largest market is the latest step in ensuring that Delta is New York's airline of choice. More service announcements that will further extend our leadership position in New York are planned later this winter."
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Old January 11th, 2006, 10:10 PM   #130
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Wednesday, January 11, 2006
Northwest, Delta combo mentioned
Transportation secretary says he's 'thinking out loud'

The nation's top transportation official Tuesday said Delta Air Lines and Northwest Airlines could merge in bankruptcy, breaking a long silence on the struggles of the domestic airline industry.

"I sometimes wonder whether or not ... Delta and Northwest will come out as a merged carrier," Transportation Secretary Norman Mineta said during a question-and-answer session following a speech in Shanghai, China, according to Reuters.

Considered one of the architects of airline deregulation 27 years ago, Mineta has been fairly quiet on the airline industry's financial woes, although he did get involved in the 2001 Comair pilot strike, helping broker a settlement.

According to Reuters, Mineta said he was "just thinking out loud," but he added, "We're going to have to see consolidation, but right now, we do have too many seats following too few passengers."

Transportation Department officials in Washington said no talks had taken place with government officials about a possible merger. They also said Mineta's comments should not be seen as a sign that the department - which has blocked only one airline merger in recent years - has changed its policy toward consolidation.

Delta and Northwest both filed for bankruptcy protection Sept. 14, fueling speculation that a merger might be possible between the nation's No. 3 and 4 carriers.

Delta operates its second-largest hub at the Cincinnati/Northern Kentucky International Airport, where it combines with its local subsidiary, Comair, to employ more than 7,000.

"With all the troubles Delta is having right now, I would think they would be concentrating on figuring out how to get out of bankruptcy first," airport executive director Bob Holscher said.

Delta and Northwest officials would not comment on Mineta's statement or on whether any merger talks had taken place. However, each company said it was concerned with its own bankruptcy restructuring.
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Wednesday, January 11, 2006
Merger? No way, say analysts
Analysis: Delta-Northwest combo unlikely
By James Pilcher
Enquirer staff writer

U.S. Transportation Secretary Norman Mineta may think Delta Air Lines and Northwest Airlines might merge as part of both carriers' bankruptcy restructuring.

But airline experts and insiders alike disagree strongly with the nation's top transportation official, who suggested that possibility Tuesday after a speech in Shanghai, according to the Reuters news service.

Such a partnership is highly unlikely, given the state of both companies and the industry as a whole, experts say.

"Two airlines in bankruptcy do not make one profitable airline outside of bankruptcy," said Mike Miller, a partner with The Velocity Group, a Washington-based aviation consulting firm. "If you are in bankruptcy, the last thing you want is a massive and expensive merger ... it would add as much stress as having to move your house at the same time you're getting married."

Still, there has been such speculation before. The two airlines filed for Chapter 11 bankruptcy protection within 30 minutes of each other on Sept. 14 - and in the same court in New York City.

The two airlines are already marketing partners domestically and nationally, and Delta has previously courted and been courted by fellow marketing partner Continental Airlines.

Just the mention of a merger with Northwest raises concern locally, given the massive impact Delta has on the regional economy and the fact that Northwest operates its own Midwest hub in Detroit.

The Atlanta-based carrier operates its second-largest hub at the Cincinnati/Northern Kentucky International Airport, where it employs more than 7,000 in conjunction with its locally based subsidiary, Comair.

One estimate of the airport's overall economic impact on the region last year was pegged at $4.5 billion a year. That was before Delta cut about 26 percent of its flying and began reducing about 1,650 jobs for both at Delta and Comair - but those cuts were expected to take only $400 million plus out of the regional economy.

"With all the troubles Delta is having right now, I would think they would be concentrating on figuring out how to get out of bankruptcy first before any of this talk can take place," airport executive director Bob Holscher said.

Comments rhetoric?

Doug Miller, another partner at The Velocity Group, said the comments "might have been more rhetoric than agenda."

"Mineta is a seasoned Washington secretary, and as a good policy maker, he might want to take this debate into the public domain, even if it is in a rhetorical sense," Miller said.

But Michael Boyd, president of the Colorado aviation-consulting firm The Boyd Group, said Mineta "was shooting from the hip."

Such a merger "would be a financial disaster for everyone except the financial entities that make millions putting it together," he said.

Boyd added that when Mineta said that airlines such as Delta and Northwest needed to "extract themselves from a hub-and-spoke operation," the secretary showed that he didn't understand the industry.

"If that is the case, you can only get to like three cities from a place like Dayton," Boyd said. "We'd better pray that he was speaking off the cuff."

Transportation Department spokesman Robert Johnson said it would be "inaccurate to make any connection whatsoever" between Mineta's comments and any potential future policy position by the department.

"One of the secretary's jobs is to think about the future of the nation's transportation industries, and he was simply expressing one possible scenario that could result from the latest challenges facing two legacy carriers," Johnson said. "He isn't the first to think out loud on the subject and likely won't be the last."

Depends on bankruptcy end

Even if a merger were to take place, it probably wouldn't happen until after both airlines emerge from bankruptcy, experts say. That process that could take two or three years or longer. Consider the extended bankruptcy of United Airlines, which is still trying to finish its reorganization after filing Chapter 11 in December 2002.

If the two companies wanted to combine then, tough decisions would have to be made about different operations, with Delta's Cincinnati hub and Northwest's Detroit operation (which is even bigger than at headquarters outside Minneapolis) certainly competing for survival due to their proximity.

In 2002, Northwest opened a new $1.2 billion terminal in Detroit that was paid for by the airport with fees and bonds, although the airline is committed to a long-term lease there.

In addition, Detroit's travel market is much larger than Cincinnati's, given that city's larger size and corporate base. The Detroit airport has a very efficient international connection system, and it is only slightly more expensive for airlines to operate there than here.

But the local airport also opened a new runway in December. It is considered one of the lowest-cost airports in the nation, next to Atlanta, omitting debt payments.

CVG has a reputation as one of the more efficient in terms of on-time performance and has better weather than Detroit - with the region's elected officials in Washington currently carrying more political clout as well.

Still, Boyd said Detroit would win such a contest easily because of its much larger population base and corporate market. But he said no such decision would probably ever have to be made.

Or as The Velocity Group's Abbey put it: "This is a hair follicle on the tail that wags the dog."

COMPARING DELTA AND NORTHWEST
Delta Air Lines Founded: 1928.

Headquarters: Atlanta.

Employees: 52,000 (including 7,000 at Cincinnati/Northern Kentucky International Airport).

Destinations: 505 cities in 95 countries.

Daily flights: 1,753.

Daily Delta Connection flights (including those at Erlanger-based subsidiary Comair): 2,455.

Passengers in 2005: 120 million.

Major hubs: Atlanta, Cincinnati, Salt Lake City.

2005 losses through third quarter: $2.6 billion.

Northwest Airlines Founded: 1926.

Headquarters: Eagan, Minn. (a suburb of Minneapolis).

Employees: 40,000 (including 7,700 in Detroit).

Destinations: 750 cities in 120 countries.

Daily flights: 1,500.

Passengers in 2005: 56.5 million.

Major hubs: Minneapolis, Detroit, Memphis.

2005 losses through third quarter: $1.2 billion.
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Old January 12th, 2006, 12:08 AM   #131
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The biggest problem between a Delta-Northwest merger are the airplanes. Delta is all Boeing equipment and Northwest is mainly Airbus equipment, especially the newer planes.

When a pilot moves up in his career they will normally start flying a larger plane. If he is trained on a Boeing 757 and advances to an Airbus A330, he must be trained in flying a completely different setup. I don't know what the differences are, but I've heard that the training hours that would be required would be prohibitive to a Delta-Northwest merger.

There is also a union problem as Delta has very few unions and Northwest is almost completely unionized. These two different workforces would have a difficult time working out similar compensations from a merged airline.

But other than that, the two airlines fit together fairly well. Delta is huge on transatlantic flights and on flights to Latin America, while Northwest has a great operation to Asia, and is one of two airlines that can use Tokyo-Narita airport as a hub for further flights.
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Old January 12th, 2006, 01:57 AM   #132
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Still misses the point. Hub and Spoke networks and too many seats are just incidental numbers to the real issue surrounding the airline industry - they are not doing a thing to make people want to fly them. The first thing thay have to do is to get people wanting to fly, and in particular, fly them again. If seat capacity is such a big issue, then maybe start thinking about offering better seating at a higher price. There is a huge jump between coach and business - fill that gap. If Jet Blue has more room for the same or a better price, who are people going to fly?

Too much effort is put into cutting costs and worrying about numbers. Worry about flying and building business.
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Old January 12th, 2006, 02:08 AM   #133
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Virgin have Premium Economy Class which is between Economy and Business.

But I still think US airlines should be operating on the same basis as European Airlines, without subsidy, without operating for years in bankruptcy protection while expanding into other markets, but operating in a protected domestic market.
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Old January 12th, 2006, 02:11 AM   #134
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Quote:
Originally Posted by pricemazda

But I still think US airlines should be operating on the same basis as European Airlines, without subsidy, without operating for years in bankruptcy protection while expanding into other markets, but operating in a protected domestic market.
Oh, you mean like Alitalia? Mind you that Eastern and Pan Am all went under without any problem.
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Old January 12th, 2006, 02:12 AM   #135
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Quote:
Originally Posted by Nick in Atlanta
The biggest problem between a Delta-Northwest merger are the airplanes. Delta is all Boeing equipment and Northwest is mainly Airbus equipment, especially the newer planes.

When a pilot moves up in his career they will normally start flying a larger plane. If he is trained on a Boeing 757 and advances to an Airbus A330, he must be trained in flying a completely different setup. I don't know what the differences are, but I've heard that the training hours that would be required would be prohibitive to a Delta-Northwest merger.

There is also a union problem as Delta has very few unions and Northwest is almost completely unionized. These two different workforces would have a difficult time working out similar compensations from a merged airline.

But other than that, the two airlines fit together fairly well. Delta is huge on transatlantic flights and on flights to Latin America, while Northwest has a great operation to Asia, and is one of two airlines that can use Tokyo-Narita airport as a hub for further flights.
mainly airbus? Northwest is a big mix of everything, Actually more Mc Donnell Douglas than Airbus. But either way, they are still incompatable, they only share 757s
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Old January 12th, 2006, 10:01 PM   #136
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^What's the other airline that can use Tokyo Narita as a hub?
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Old January 12th, 2006, 10:02 PM   #137
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I assume united since they also have a big pacific operation, not sure though
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Old January 12th, 2006, 10:02 PM   #138
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A merger between Delta, Northwest?
Transportation chief says he was just 'thinking out loud'
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 01/12/06

Ever since Delta and Northwest airlines went into bankruptcy protection on the same day last September, some have wondered whether the two ailing carriers might emerge as one.

Now they include U.S. Transportation Secretary Norman Mineta.

"I sometimes wonder whether ... Delta and Northwest will come out as a merged carrier," Mineta was quoted as saying this week at a conference in China. He added he was just "thinking out loud" when he answered a question from the audience.

A DOT spokesman says his boss "did nothing more than express one possible scenario" and has no inside information.

Delta spokesman Anthony Black said the Atlanta airline is "totally focused on our restructuring and building a strong stand-alone airline."

He declined to comment on whether a merger might be part of Delta's strategy to exit from bankruptcy, but he noted that Chief Executive Gerald Grinstein has occasionally told employees and others that the airline's goal is to remain independent.

On the other hand, Grinstein for years has also predicted the number of big U.S. airlines will shrink.

Last year, US Airways merged with discount carrier America West as part of its strategy to emerge from Chapter 11. But United Airlines, the other old-line carrier going through Chapter 11, hasn't been linked to any merger scenarios.
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Old January 12th, 2006, 10:10 PM   #139
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Checking Narita's website shows UA running 12 of their own flights today (that is no code shares) arriving today, which I guess could classify it as a "hub"
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Old January 13th, 2006, 01:32 AM   #140
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Northwest and United are the two that are permitted to use Narita to transfer between Asian city routes. United bought the rights to Pan Am's Asian/Pacific network in 1985.
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