[Openflow-dev] MERGER MANIA PART II

[Summit M. S. <sum...@ms...>]

MERGER MANIA PART II

May 13, 2010

Last week, we examined the likely effect of the proposed
Continental-United merger on corporate travelers, meeting managers and
the economy as a whole. The Highlights:

Frequent flier miles are secure – the programs will be merged into a
single entity as quickly as possible if the merger is approved.



The new “United” will concentrate its pricing power in its eight hub
cities, dropping unprofitable routes and raising prices for smaller,
underserved cities—meaning higher fares for markets with less
competition.



Expect a higher concentration of smaller planes and fewer seats,
although potentially higher frequency in some markets, as consolidation
continues.



Some markets dominated by the two carriers (ie New York/Denver) may see
an increase in lower cost carrier flights, which may be able to gain
entry to new markets and pick up share as a result of the merger. Who
knows? Maybe Southwest will get access to Washington National, Newark
and take aim at hubs like Denver and Cleveland. 



We should stress that this merger is far from a “done deal,” although
historically the various arms of the government have done little to
stop anti-competitive mergers, as long as there was a significant
market presence by other carriers ready to step in and fill any void in
the market. 

While it may make sense economically, the political landscape has
changed radically since the Delta Northwest merger was announced two
years ago. As pointed out by Travel Weekly, an influential trade
publication, the Obama administration regulators have typically given
consumer interests top priority. Lawmakers may find that in an election
year, they must answer to myriad constituencies that might have reasons
to oppose this particular merger or airline consolidation in general.
Several Congressional leaders have already announced their opposition
to the merger.

We’ll be sure to keep an eye on this situation for you and keep you
advised of any developments.

VOLCANO REDUX

Speaking of things to keep an eye on, European travelers have several
things to watch carefully over the next month. Ash from Iceland's
Eyjafjallajokull volcano, which led to that huge aerial shutdown last
month, has erupted again. This time, the cloud of fine particles closed
airspace over the Central Atlantic, as well as airports in Portugal,
Spain and for the first time, North Africa. There were also limited
closings in Ireland and the UK. It’s apparent that shifting winds are
making this natural phenomenon even more unpredictable. 

If you’ve got a flight planned to Europe in the near future, you should
check with your airline’s website for the latest news on delays and
diversions. When booking, we recommend giving yourself at least TWO
HOURS CONNECTING TIME in your arrival airport, instead of those one
hour transfers the airlines like to promote. After all, once you get to
Europe, it’s not like there’s a flight every two hours between any two
capitals on the continent! Booking adequate time between connections
increases the chances you will arrive on time, reduces your stress
levels and gives you time to find your way through immigration in those
often confusing European hubs.

BRITISH AIRWAYS STRIKE ACTION

As if we didn’t have enough to worry about, British Airways cabin staff
has announced multiple walkout dates for the end of May and into June.
Travelers through London are likely to encounter massive delays,
especially at Heathrow.

If the proposed strike materializes as planned – it is likely to
provoke the first major test of the new coalition government of Prime
Minister David Cameron.

BA has said it will continue to operate most of its flights and has
condemned the action of the cabin crew union as showing “callous
disregard” for the traveling public. The four strikes, each of five
days duration, are planned during spring break and school holidays.

The last series of strikes cost BA more than $70 million in lost
revenues, on top of the damages caused by the Volcano. Only time will
tell whether the sides will get back to the bargaining table. 

If you manage air travel or meeting spend, you need to know what’s
affecting air travel and meeting costs. To a great extent, we’ve
focused attention on breaking airline industry news over the past
month, simply because there have been major shifts in the playing
field.

Next week, we’ll focus on recent developments in the hotel industry.
Occupancy levels are up, and so are prices, signaling a willingness of
company executives to spend more on travel. The uptick has been
especially strong at the higher-priced end of the spectrum. What does
this mean for corporate travel and meeting planning? Tune in next
week!

Now, for something completely different. If you've got a meeting coming
up, invest a few moments and schedule a consultation on our website at
www.SummitMgt.com or call 1-800-835-9767 ext 120. You'll be glad you
did!

Till then, have a great meeting!

Rob and Joe Lipman

Visit Summitmgt.com

http://www.msco.com/sendstudio/unsubscribe.php?M=212251&N=416&L=57&C=f59091d44f79c73f077e4da35071e30d