I look at BoardingArea a few times a day, but I nearly spilled my Friday cabernet when I saw Adam’s headline – “AA Buys Alaska, Korean Leaves SkyTeam, Joins Oneworld, DL & AS Break-Up in this Crazy Scenario.” What can I say? Then I clicked through to see that he was talking about a research report from a fairly well-known Wall Street analyst. Of course, I don’t think AA is buying anyone until the AA-US merger is finished, and even then I think it’s a long shot, but let’s talk about this for a moment.
I’ll let you in on a widely known secret – AA wanted Alaska bad….really bad. After a failed merger with Air Cal, and flush with cash in the late 90’s, AA was on the prowl. From a “back of the napkin” points on a map scenario, buying Alaska made sense. It would fill in a big gap in AA’s network – north/south routes on the west coast, and AA and Alaska had a long standing relationship. I’m probably the only blogger on BA that remembers the AA-AS interchange agreement, and AA pilots flying AS airplanes and vice-versa. The only problem was that Alaska had no interest in a merger, and AA went on to buy Reno Air which worked out famously not well.
Truth be told, I thought an AA and Alaska merger made sense at one point, and from a purely financial standpoint, it might even make sense today. The only problem with that is that it won’t happen. Short of a failing company scenario, I believe that AA-US was the last big airline merger in this country, at least for the foreseeable future. The impossible politics aside, I don’t think the traveling public will stand for another. In the absence of a regulated economic marketplace, the only thing that could happen finally has, the airlines have consolidated down to a number that allows them to charge fares that lead to profit levels that begin to approach your run of the mill table and chair manufacturing company. Fares that get to that aren’t conducive to $99 transcon flights, but I digress.
In the end, the most interesting piece of the article Adam cites in my book is the possibility of Korean exiting SkyTeam. Will it happen? Who knows? Could it? You bet it could! And then, things could get cute.
-MJ, March 6, 2015
[…] the papers and the blogosphere about Alaska Airlines recently. Admittedly, I’m guilty of my own bit of pontification about Alaska. The articles in the local Seattle press have run the gamut […]
I have something on this for the morning that I’m linking to. AA would have to give up Alaska slots probably at O’Hare and maybe DCA. I bet AA would have to give up a bunch of gates at LAX to get the deal done. Alaska has always been priced too high to get a deal done. I bet Delta would bid on them too, their LAX operation alone is pretty desirable because it would finally let one carrier pull away in that market. But I don’t disagree with anything in the post, except that consolidation is over, I think… Read more »
I should’ve said “DL wants AS too!” đŸ™‚
@Robert,
I didn’t forget. I’m saving that for the next post. đŸ˜‰
You forgot to tell us how good Delta is, and how over entitled the public is. Hurry on now, get back to giving reviews about cruise ships and their fat buffets they serve every night.
KL is KLM correct? KE is Korean.
Way correct. Corrected about 3 minutes ago, but takes a bit to populate. đŸ™‚