Monday, December 8, 2008


Why is it that the price of oil is down and airfare is up? Hedging apart...
Deregulation was great while it lasted but now we are going back to a few unionized airlines.
Delta Air Lines and Northwest closed their $3.2 billion merger deal, which means greater seat capacity cuts and firmer airfare prices across the industry. At last check, the Amex Airline Index rose. Delta and Northwest have created the world's largest airline by traffic. The other four remaining legacy carriers will be able to offer fewer benefits for small business travelers as well. Prices increase, as inventory tightens so loyalty programs will be worthless to the little guy. Unless you are with a big company or are in the sky (on the road), 90% of your life, you may as well forget trying to rack up elite miles because the airlines are too big and they know that we have to fly the airline with a hub near our homes. They can treat us as they wish because we will have no choice.
The combination of Delta and Northwest will replace American Airlines AMR Corporation from its position as the No. 1 U.S. airline and will be a challenge to the world's largest, AIR France-KLM.
What will happen to fares and service after the merger?
When Northwest emerged from bankruptcy in 2007 they had a lot of service problems because they had let a lot of staff go and this led to flight cancellations and problems with the unions. United Airlines also had problems when they wanted to combine with US airways so they had to cancel the merger. Lost luggage and flight departure problems were the carrier’s downfall.
Routes with competition offer the best prices and service, but now that many airlines are going bankrupt or merging, we will be at the mercy of a few airlines. Deregulation has led to the same situation that deregulation was supposed to prevent.

Southwest keeps fares down and I am glad that they will get bankrupt ATA airlines air slots for NYC La Guardia airport next year because low fare airlines like Southwest, keep fares low. Virgin Atlantic is concerned that British Airways and AA are trying to get anti-trust immunity granted so that the two airlines would be permitted to fix ticket prices and schedules. British Airways, the powerful global airline, is kept in check with Virgins expansion.
Both Delta and Northwest are members of SkyTeam, so your elite miles should still be valid on the new system. It is not clear how they will handle the Lifetime Elite Status.
My co-worker has a million miles on UA United Airlines and will be awarded lifetime status and is concerned about changes in the industry. Continental Airlines is reported to have held talks with both United Airlines and A Americans AMR Corp.
US Airways will keep The Million mile mark that customers attained before the merger in May of 2006. These passengers attained a million miles and are able to retain this status but no new members can qualify. The highest elite status is the a Chairman’s Preferred membership achieved with 100,000 miles or 120 segments a year.

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