clock menu more-arrow no yes

Filed under:

TWA deal shouldn't hurt Utah

As always, when merger mania strikes, people get nervous. They want to know "what does it mean to me?" That's what Utahns have been asking since last week's announcement that AMR Corp., the holding company for American Airlines, announced it would buy the assets of bankrupt Trans World Airlines for $500 million.

It's even more premature than usual to call that buyout a done deal because the bankruptcy court could nix it, deciding to sell TWA's assets at auction — not unlike a Depression-era sheriff's sale when family farms and equipment were sold off to the highest bidder after Pa and Ma missed a mortgage payment to the bank.

But immediately after the announcement Wednesday, the news wires were full of pundits speculating on what it means to Atlanta-based Delta Air Lines, Utah's major full-service carrier with its regional "hub" operation at Salt Lake City International Airport.

The gurus see it one of two ways. 1. If the deal goes through, the industry will no longer consist of the "Big Three" — American, United Airlines and Delta — it will be the "Big Two," with American and United together accounting for half of all the airline seats sold in the United States, leaving a distant-third Delta scrambling to keep its market share, never mind increase it.

That's because, the thinking goes, Delta would have a hard time competing for the lucrative corporate travel business, which is the life blood of the industry. (You can't make a living flying Mom, Dad and the kids to Disneyland once a year.)

The Delta doomsayers say Delta will likely scramble to find merger partners of its own, probably with Continental Airlines or Northwest Airlines, although most concede that would be very difficult for a variety of cost and competitive reasons.

The No. 2 script is that Delta will do just fine with its well-established "hub-and-spoke" system around the country and that it should just sit tight, do nothing and watch to see if American is able to digest TWA.

For its part, Delta isn't saying what its plans are, but there's no doubt this latest deal has their attention.

"We're watching the event carefully," agreed Delta spokeswoman Alesia Watson in a phone interview last week. "Delta is well-positioned to respond and compete in a changing competitive environment. As you know, we recently purchased Atlantic Southeast Airlines and Comair and we stand ready to participate in structural changes in the industry."

Does that sound to you like she was reading from a cue card? Yeah, me too. But you can't blame Delta's people for playing it close to the vest. Most of the other carriers, such as Southwest Airlines, the major discounter out of S.L. International, wouldn't even tell me that much. "We haven't been able to study (the AMR/TWA merger) yet so we really can't speak intelligently about it," said Kristin Nelson, spokeswoman for Dallas-based Southwest.

In other words, "no comment," but it's safe to say that Southwest doesn't spend much time worrying about the big boys in the industry. Like JetBlue, and the other low-fare, no-frills, small-planes carriers, Southwest doesn't waste much time worrying about the jumbo jetters.

Bottom line? It's way too soon to say what, if anything, this latest deal will mean to Utah air travelers, but it's probably safe to say "not much" unless it were to one day radically change (lower) the number of flights that Delta and its "Delta Connection" partner, SkyWest, operate out of the Salt Lake airport.

"It's just really unknown at this point what it means for us," said Barbara Gann, spokeswoman for the Airport Authority. "The station manager for TWA says there just isn't enough information at this point to know what it means."

But since American Airlines has only six daily departures from Salt Lake, TWA three and United 17, the merged "Big Two" would still have only a combined 26 flights out of Salt Lake compared to 147 for Delta and 104 for SkyWest (Southwest has 38, America West six, Continental four, Frontier three, Northwest four and JetBlue one.)