BLUEPRINT FOR OLIGARCHY
The Brancatelli File, January 25, 2001 -- The published details of the American-United scheme to buy up and divide US Airways and TWA are appalling enough. After all, what part of United and American controlling half the aviation market doesn't say oligarchy to you? But you haven't even heard the other half. The 20-year deal that envisions United and American sharing what is now the US Airways Shuttle is supplemented by a "memorandum of understanding" filed with the Securities and Exchange Commission. It is literally a blueprint for oligarchy. American and United not only agree to remain at essentially the same size relative to each other for at least four years, American is penalized if it attempts to grow. Should American buy Northwest, Continental, Delta, Southwest "or any domestic airlines of equivalent or larger size," then the Shuttle deal is terminated. If American even enters a code-share deal with another major carrier, then the Shuttle deal is terminated. And whenever American chief executive Don Carty and United chairman Jim Goodwin play Monopoly, Carty can only buy Boardwalk if Goodwin already owns Park Place and the Water Works.
COUNTING THE COMPETITORS
The Brancatelli File, February 15, 2001 -- We already know that United chairman James Goodwin can't run a good airline. But it seems he can't count, either. Goodwin told the Senate last week that he did not "see us getting down to the two or three carriers ... maybe we will get to five" mega-carriers. Well, let's do the math. If all the proposed mergers go through, then we'll already be down to five: United and American, which would control about half of the U.S. market; and Delta, Continental and Northwest. And since the Small Three won't sit still while the Big Two run half the nation, we'll be down to "two or three" in a blink of an eye. You have to wonder why anyone listens to Goodwin anyway. Last year, in front of Congress, he actually testified that he didn't think a United-US Airways merger would lead to any other airline combinations. How's that prediction working out for you, Jim?
SELLING THE UNSALABLE
Tactical Traveler, March 1, 2001 -- Later this month, United is expected to start an advertising campaign promoting the benefits of its proposed merger with US Airways. In fact, more than 500 United employees are now working on an integration plan for the two carriers. Meanwhile, United's operational performance continues to deteriorate. On some days in February, it "mishandled" as many as one bag per 100 passengers, a rate twice as high as the industry average in the year 2000.
TROUBLE IN MERGER CITY
Tactical Traveler, March 8, 2001 -- When it first announced the deal last May, United boasted that its proposed purchase of US Airways raised virtually no regulatory concerns. But pressure from the Clinton Administration's Justice Department led United to push back its completion date to April 2. Now United has had to backtrack again because the Bush Administration's Justice Department has questions about the peculiar deal where United and American would jointly operate what is now the US Airways Shuttle. United now has no firm date for the merger. Meanwhile, United's labor unions are also pressing the airline over the merger. Mechanics and flight attendants, who are attempting to negotiate their own contracts, also want protection against layoffs and forced relocations should the US Airways purchase be completed. And then there's this: United has agreed to sell the commuter carriers comprising US Airways Express if the merger is approved.
IS THIS THE END OF BAGGAGE TEMPLATES?
Tactical Traveler, April 19, 2001 -- No issue has so enraged frequent flyers in recent years as several airlines' unilateral decision to install carry-on baggage sizing templates at security checkpoints. First pioneered by United, the leader in strategies to alienate customers, templates were eventually adopted by Delta, American and Southwest airlines. But now the tide is being reversed. Regulatory problems have forced American to remove the templates at eight of the nine cities where it installed them. Delta has halted plans to add templates at additional cities. And Continental, which invested in oversized carry-on bins, has successfully fought off the implementation of templates at several airports. It even won a federal court order to force the removal of the templates at Washington/Dulles airport. Only United remains committed to templates and continues to argue--against all statistical evidence--that the sizing devices improve on-time performance. "United is basically alone on this one now," an executive of one major carrier told me last week. "The things infuriate our best customers, they don't reduce the amount of carry-on bags and they don't improve on-time performance, so what's the point?"
THE 'FICTION' AT THE UNITED SHUTTLE
Tactical Traveler, May 10, 2001 -- The horrendous operation of the United Shuttle was masterfully described in last Sunday's edition of the San Francisco Chronicle. As the story detailed, two out of three Shuttle flights between Los Angeles and San Francisco are either canceled or delayed. The United Shuttle schedule "is a fiction verging on farce," the Chronicle concluded. As the paper explained, United has reacted in recent months by padding SFO-LAX schedules, increasing a flight time of about 54 minutes to as long as 93 scheduled minutes. Even then, however, 61 percent of the flights continue to be canceled or delayed. United's own assessment of its performance? "I am not convinced anybody could offer a better product," said Shuttle president Montie Brewer. Chronicle reporter Elizabeth Fernandez also noted that Brewer boasted that the United Shuttle "is serving as a model for the airline."
THE MERGER IS DYING
Tactical Traveler, May 17, 2001 -- United Airlines suspended planning for a US Airways acquisition last week and sent the 500 people working on its transition back to their regular duties. United officially denies the move has any significance other than the fact that the planning teams have completed their work, but virtually everyone else interprets the decision as another sign the controversial merger has run aground. "There's never enough time to plan for something like this," one United insider said earlier this week. "Internally, most of us feel as if this is dead." United first proposed the merger almost exactly one year ago, but it has been delayed by regulatory opposition. In fact, the Justice Department has never said when, or even if, it will make a public statement on the merger. The next key date in the saga: August 1. That's when either United or US Airways can bail out of the deal with minimal financial penalty.
READING THE TEA LEAVES
Tactical Traveler, June 7, 2001 -- More than a year after the United-US Airways merger was first announced, most experts are predicting that the two carriers will never combine. The "no merger" side got a huge boost on Tuesday when Transportation Secretary Norman Mineta said even he expected the Justice Department to reject the proposal. Mineta was asked if he thought the merger was dead. His reply? "If I were to read the tea leaves as they are right now, yes." It's important to remember, however, that the Transportation Department has no official stake in the merger decision. The power to approve or reject an airline merger is solely in the hands of the Justice Department. And, officially, the Justice Department has made no public comment, other than to request more information from United, US Airways and American Airlines, which would buy a stake in what is now the US Airways Shuttle if the merger is approved.
These items originally ran at biztravel.com. This annotation originally appeared at JoeSentMe.com in December, 2002.
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