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DOT overrides Justice, Continental Airlines wins antitrust relief

Posted Jul 13th 2009 2:20PM by Tom Johansmeyer (RSS feed)
Filed under: Industry, Competitive strategy, AMR Corp (AMR), Contl Airlines'B' (CAL), UAL Corp (UAUA), Delta Air Lines (DAL)

Continental Airlines (NYSE: CAL) just got the relief it needs to compete. Despite resistance from the Department of Justice (which can only recommend), the Department of Transportation has granted the airline immunity from antitrust laws. This clears the way for Continental to work with United Airlines (NASDAQ: UAUA) -- and other carriers -- on international routes. Now, the airline can join Star Alliance, which already has antitrust immunity.

At the same time, DOT approved a joint venture among Continental, United, Lufthansa (OTC: DLAKY) and Air Canada. This new relationship would involve trans-Atlantic routes.

Continue reading DOT overrides Justice, Continental Airlines wins antitrust relief

Will it be clear skies for Virgin America?

Posted Aug 6th 2007 2:30PM by Tom Barlow (RSS feed)
Filed under: Products and services, Launches, Competitive strategy, Private equity, Southwest Airlines (LUV), JetBlue Airways (JBLU)

On Wednesday, the first Virgin America Airbus A320s will take flight from New York (JFK) to Los Angeles (LAX) and San Francisco (SFO). The offshoot of European giant Virgin Atlantic, VA is owned primarily by Black Canyon Capital and Cyrus Capital Partners. It enters the market promising to deliver better prices and service than its rivals.

Its immediate rivals would appear to be JetBlue (NASDAQ:JBLU) and Southwest Airlines NYSE:LUV), both airlines operating on a model established by Virgin Atlantic focused on price, price, and price. How likely is Virgin America to make an impact on the increasingly crowded and fragile American air industry?

It has already driven down the price of the NYC-SF route to $250, according to the Wall Street Journal, significantly undercutting its rivals. How much of this price reflects lower costs, versus acceptable losses to establish business, is not clear. The airlines does start with new planes and hardware and new (cheap) hires, so it likely is starting with the lowest overhead it can anticipate.

JetBlue and Southwest, on the other hand, are already struggling with the increased expense of maintaining well-used equipment and the growing salary expectations of experienced crews, leaving them less room to trim costs.

Continue reading Will it be clear skies for Virgin America?

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Last updated: November 26, 2009: 05:24 PM

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