US Airways - American Merger Oppossed by US Department of Justice

Adding to the heated controvery, political uncertainty and maneuvering surrounding control of the Charlotte Douglas International Airport (CLT) the US Department of Justice weighed in and says that it is against the merger of US Airways and American Airlines, which would make CLT an even bigger one-airline hub. The reason for the objections according to Attorney General Eric Holder, is lack of competition and further consolidation of the airline industry, resulting in fewer choices and higher fares for travellers. The Business Travellers Alliance and several states piled on to applaud the Justice Department's move. With Jerry Orr and CLT's status in Limbo, these are trying times for those trying to do long range planning and strategy for the airport. Attorney General Holder's move is much like that of Caaptain Renault in the movie Casablanca : "I'm shocked, shocked to find that gambling is going on in here!" This cynical long-time observer of and commentator on the airline industry is amazed that it has taken some six US Presidential Administrations over the course of some 38 or more years to realize that deregulation of the US airline industry has resulted in fewer choices for consumers and an outmoded hub and spoke systems with fewer long distance non-stop or direct flights; itineraries that take as long as those in a DC-3; and in places such as Charlotte, a monopoly on flights and astronomical fares (try $3,000 To Washington Dulles on one day.) These are interesting times to be observing the future of the US airline industry in places such as CLT. But it will also be a bumpy ride over an uncertain course.

MIA gets black Lab Retrievers to help screen passengers - Miami-Dade - MiamiHerald.com

MIA gets black Lab Retrievers to help screen passengers - Miami-Dade - MiamiHerald.comhttp://www.miamiherald.com/2013/05/03/3379700/mia-gets-black-lab-retrievers.html

The use of dogs adds another layer in security - it is random and is a factor that terrorists have to include in their penetration plans - The basic question they have to ask themselves is: "Do we feel lucky today about this target?" 

The Battle for Control of Charlotte's Airport: Conflicts of Interest?

http://www.charlotteobserver.com/2013/04/25/4004897/behind-the-battle-for-clt.html#emlnl=Todays_Headlines

The political moves for control of Charlotte's airport (CLT) has all of the making of a political thriller with a potential Department of Transportation regulator potentially beholden to an airline he would regulate; one party seeking to wrest control of a facility controlled by the other party; and most customers of CLT never stepping foot out of the gate areas.

Canadian authorities arrest two for plotting attack on VIA Rail - TRAINS Magazine

Canadian authorities arrest two for plotting attack on VIA Rail - TRAINS Magazine

Article on the Mounties getting their men....Canadians bust a terrorist plot.

Carnival Takes Steps

http://www.marinelog.com/index.php?option=com_content&view=article&id=3911:carnival-rolls-out-700-million-fleet-upgrade-plan&catid=1:latest-news&Itemid=195

In an effort to recover its reputation Carnival attempts to bolster safety and reliability. Will it work?  Training, training and more training is key!

Foreign Exchange News: Should You Invest in Russia?

http://www.forexnews.com/blog/2013/03/14/investing-in-russia/

     This link provides an interesting description of the investment climate in Russia.  Of course Russia is one of the BRICS countries (Brazil, Russia, India, China and South Africa) and has always been an agricultural (even without Ukraine) and natural resource powerhouse.  There are, however, certain dangers such as corruption (that also exists in other BRICs countries.)  
     Those investors actually thinking of investing in such tangible projects and activities in Russia such as energy, railroads, aviation, tourist infrastructure will need the services of infrastructure security and international affairs experts such as those of us at Pierce Pugliese and Carolla Air Analytics, LLC (www.aerorailsecure.com) with expertise in Russian geography, history, government, security services and dealing with the Russian (and other former Soviet such as Moldovan, Uzbek, and Ukrainian) bureaucracies to help them plan for the future in Russia.



Violence Against Swiss Tourists: Précautions de Sécurité Pendant à Vélo et Camping à l'Etranger

http://www.tdg.ch/monde/faits-divers/proces-suissesse-violee-inde-debute/story/13242161

     Violence Against Swiss Tourists: Précautions de Sécurité Pendant à Vélo et Camping à l'Etranger  (Safety Precautions While Bicycling and Camping Abroad.) This article from Tribune de Geneve describes the trial of a gang in India that raped a Swiss tourist and also assaulted her husband, robbing them both.  They were bicycling in India and camping under a tent.  This incident underscores the need to travel safe and smart, knowing the threats and risks of foreign countries, not that we don't have threats in the US.  Our firm Pierce, Pugliese and Carolla Air Analytics, LLC often is in a position to help you, your company or your travel agent with threat assessments as you prepare to travel,take shore excursions - or make investments or seek to evaluate threats to infrastructure abroad.  Although we cannot assure your safety and security, and can't be liable for any misfortunes we can, however, using our comprehensive international security expertise, augment such sources as the US State Department advisories and present to you threats that might not readily be apparent.  Such advice as being especially vigilant against pick-pockets on trains and in stations in Poland can help you protect your wallet and your person. 

American-US Airways Merger: Uncertain Course for Charlotte

      As a long time airline and transportation analyst I have some concerns regarding the US Airways - American Airlines merger and how it might affect Charlotte.  Although I reside and work about 400 miles north of Charlotte next to Washington's Dulles International Airport I advise and work with Edna Chirico, a consultant in Charlotte and have a keen interest in Charlotte's economy and Charlotte Douglas International Airport (CLT).  Under the long time stewardship of almost legendary and extremely capable Jerry Orr CLT has truly made North Carolina "first in flight." This post is an update of an assessment that I provided some days ago.

           The merger of US Airways and American Airlines will have a major effect on the economic fortunes of the Charlotte, North Carolina Airport.  Snobs from elsewhere in the US sometimes refer to Charlotte as “Mayberry with an Airport.”  (Mayberry being the rural North Carolina town of an Andy Griffith Show and Mayberry RFD television comedy series of the 1960’s.)  Charlotte, with its financial and business presence with several Fortune 500 firms located there, including several such as Chiquita Brands with international operations and equities isn’t exactly Mayberry.  Notably, there are 194 German-owned firms in the Charlotte area including 59 U.S. headquarters; making Germany the most largely represented foreign country in the region. Charlotte Douglas Airport (CLT) is the sixth largest airport in the United States when it comes to flight operations, but about 90 per cent of passenger traffic is US Airways hub traffic connecting through CLT and does not represent locally generated travel.  CLT is home to over 15,000 direct airport jobs.   The big variable in this merger is that Charlotte does not generate nearly as much originating traffic as other major US Airways and American hubs such as Miami, Chicago, JFK New York, and Philadelphia do. 

            What will happen to CLT now that US Airways takes over American?   A friend of mine who is a noted airline economist and frequently quoted in the mainstream aviation professional press assures me that CLT will remain a hub.  It is well-placed for regional connections with long distance flights.  However, for reasons outlined below some of its international significance might diminish. 

             However an excellent April 9, 2012 article by Ely Portillo in the Charlotte Observer  quoted Aviation analyst Henry Harteveldt of Cambridge, Mass.-based Atmosphere Research Group, as stating it’s risky to invest in more capacity with the future of the airport’s No. 1 carrier up in the air. “Charlotte’s future is so heavily tied to US Airways’ status as an independent airline, and right now there is a lot of uncertainty,” he said. “There really is a risk.”   (Read more here: http://www.charlotteobserver.com/2012/04/09/3158982/airport-bets-a-billion-on-future.html#storylink=cpy  )   According to the same Observer article respected and veteran CLT Airport Director Jerry Orr said at the time “he’s not concerned about the possibility of a US Airways merger. He said there always will be room in the Southeast for a hub besides Atlanta, and Charlotte Douglas can be that hub as long as it is well-run and stays low-cost for airlines. That might be wishful thinking.  US Airways CEO Doug Parker [said] the airline remains committed to a Charlotte hub, even in the event of a merger. “I suspect in any sort of individual scenario that involves US Airways or any other airline in the future, that Charlotte will be a hub airport,” he told the Observer.”  If past actions on the part of American, US Airways and Delta are any indicator such talk is cheap when you consider their past history. The citizens of Pittsburgh, St. Louis and Cincinnati can tell the sad tales of woe.   Since deregulation in the 1970’s the airline oligopoly that has evolved or devolved in the United States has been interested only in market share, dividends and cost-cutting.  They are no longer effectively regulated as a public utility.  According to MSN News: “In the shakeout of American's merger with US Airways, experts believe American's hubs in Chicago, Dallas-Fort Worth, New York, Los Angeles and Miami are likely to emerge as winners, if only because those markets can support a large amount of traffic on their own. That leaves US Airways' facilities in Philadelphia, Phoenix and, especially, Charlotte, N.C., most at risk.”       http://news.msn.com/us/airline-merger-could-squeeze-some-hub-airports                      

          Other communities in the United States have been shortchanged and hurt by the consolidation and formation of oligopolies in the airline industry in the advanced throes of deregulation.   (Note: I am neither a fan of deregulation nor consolidation of the US Airline Industry and believe those factors have adversely affected customer service, the economics of aviation, jobs and professionalism and the availability of decent air transport to many communities.)   I would respectfully suggest those who care about and serve Charlotte to not be sanguine or Pollyannaish and to have a “Plan B” regarding the status of US Airways’ hub at CLT as this merger evolves.   Here, again according to the Charlotte Observer is what happened elsewhere in the US when airlines “consolidated:”

·              Pittsburgh International Airport, a former US Airways hub, was stuck with a new, $1 billion terminal after US Airways cut hundreds of flights there. Airport officials have said they expect to be paying back debt for the expansion until 2018. That, in turn, has kept its operating costs high.

·              Lambert-St. Louis International Airport started on a $1 billion expansion plan in 2001, the same year American Airlines bought bankrupt TWA, which had dominated the airport. Despite pledges to keep St. Louis as a hub, American cut hundreds of flights there and soon discontinued the hub, costing St. Louis direct service to many destinations.  I am very familiar with that disaster for St. Louis and consumers.  I used to fly between Washington Dulles on a comfortable MD-80 on TWA and for a bit after the hostile takeover on American.  Soon you could only fly on United or American Eagle subcontracted “regional carriers” in cramped small commuter jets. 

·             Closer to home at Raleigh  when American Airlines closed its hub in 1995 it was by far the airport's biggest tenant, at one point flying 73 percent of its passengers and offering about 200 daily departures.   Raleigh’s airport managed to attract Southwest Airlines and other carriers, but never regained major hub status.

           There are some salient geographic, operational and even historic airline considerations we need to consider now that US Airways has swallowed American: 

            First the good news - there is opportunity in chaos:  During this merger it will take months if not years to rationalize American and US Airways respective route structures.  Charlotte City, the Airport or somebody working for and with them should be studying those now and thinking of them now.  The city and local business needs to be preparing a case as to why Charlotte Douglas should remain a hub.

             Second, consider US Airways history: For Charlotte, there is one important word regarding the history of US Airways: Piedmont, the iconic North Carolina-based local service carrier of the 1950’s through the 1980’s.  US Airways has a family tree of many former local service carriers such as Allegheny (which served mainly Pennsylvania and adjacent states) which merged in 1967 with Indianapolis-based Lake Central Airlines then in 1971 with Upstate New York and New England’s Mohawk, in 1987 the West Coast’s PSA; and in 1987 with Piedmont (a marriage Jerry Orr is quite familiar with).   Then, in 2005 America West of Phoenix bought out and merged with US Air and became US Airways.  The thing to consider is that US Airways is a hodge-podge of a multitude of local service carriers that has taken decades to rationalize.   Charlotte, as a former Piedmont hub might “go back to the future” and serve as a smaller American (US Airways + American, that is) hub for the Southeast utilizing for the most part “regional airlines” subcontracted aircraft in American livery.   A review of flights out of Charlotte show that many with a US Airways flight number and painted in US Airways colors are not “real” US Airways flights but rather regional airlines contracted to US Airways.  The opportunity in this chaos is that many passengers hate transiting through Atlanta, JFK and especially Miami.  But geography and the economics of flying might offset any concerns regarding convenience.   Has customer convenience and service been a salient factor in air travel in the United States in recent years?

            Third, and most ominously we should consider operational geography.  This US Airways acquisition of American US Airways would gain three important hubs at New York’s JFK, Philadelphia and at Miami that are closer and less costly for fuel to Europe and Latin America and the Caribbean respectively than Charlotte.  When we look at an airline route map a Mercator Projection is misleading as flights from Asia, Europe and the Middle East don’t come from the east over the Atlantic over Kitty Hawk, but follow a Polar Great Circle.  In some circumstances using Charlotte as a hub could cost a lot more in expensive fuel.  It also could be redundant.         Fourth, consider the important German market.  US Airways is a member of the Star Alliance, but not the Star Alliance linchpin that United is.  American is the US bulwark of the Oneworld Alliance, and the new carrier would probably affiliate that way.  That raises questions on Lufthansa’s flight from Munich to Charlotte if there are no Star Alliance regional connections to connect with in Charlotte – shifting connections to United at the closer to Europe Dulles Airport (IAD) hub in Northern Virginia.

            Fifth, consider Latin America, Chiquita and Brazil. Will 700 Chiquita staff in Charlotte justify non-stops daily from the Caribbean and South America rather than using the myriad of current American flights into their fortress Miami?  No need for direct flights from CLT to Sao Paulo or Rio or Buenos Aires as passengers already arriving in Miami on American or their Oneworld ally and code share partner LAN would be funneled to Charlotte – at less cost to the new airline through Miami.  Unfortunately Miami’s role as “the Capital of Latin America” and cultural and immigration heritage links mitigate against a shift in many American flights to Charlotte especially as it would cost more in fuel costs.  Then again, as mentioned above, the opportunity in this chaos is that many passengers hate transiting through Miami with its awful Immigration and Customs lines, and perhaps the Latin American Chamber of Commerce in Charlotte can play a role in influencing future US Airways decisions.

            Finally there is the fact that Charlotte generates relatively little traffic to justify the economics of being a hub. As noted by MSN News, Adie Tomer, an associate fellow at the Brookings Institution, said that with 1.8 million people, the city just isn't big enough. "There's a lot of advantages to Charlotte, but they don't have the local base to fall back on, so they have to constantly incentivize the airline itself to keep flying through there," he said. "They just really have a connectivity that vastly outranks their metropolitan economic standing."

            What about a Plan B?   A not so obvious plan would be to start suggesting to the regional airlines flying smaller aircraft out of Charlotte that they could fill the gap left by a US Airways, soon to be American downgrade of CLT’s status.  They would be left in a lurch by such a move.  However, one should note that the jobs for those airlines are much lower paying – in some cases barely above minimum wage even for pilots and the volume of flights would not generate nearly as much economic activity and associated jobs that the current situation does.

            In short, Charlotte remaining a US Airways - American Airlines hub in its current state is not a done deal and there are serious factors suggesting it might not.  There will be an uncertain course for the Charlotte Airport and its boosters (which I regard myself) to navigate in coming months.  We have a lot of work ahead of us.

http://news.msn.com/us/airline-merger-could-squeeze-some-hub-airports