An Air France Airbus A318. The airline is the world’s largest operator of the A318. Photo: Thomas Becker
The last Airbus A318 operated by a North American airline has exited service. The A318, sometimes affectionately referred to as the “Babybus,” is the smallest member of the Airbus A320 family. Weighing nearly the same as its larger brother, the A319, and operating with the same crew requirements, the economics of operating the A318 in North America just didn’t make sense. The similarly-sized Boeing 737-600 has largely suffered the same fate (although WestJet still operates a fleet in Canada).
Northwest Airlines Boeing 757
There has been a lot in the news about airline mergers and buy outs. Delta & Northwest, United & Continental and most recently AirTran & Southwest. Some in the media throw around “merger” and “takeover” interchangeably, but they are very different. When two airlines come together, there are two types of sale agreements: the merger and the takeover.
I got an email from a reader (thanks Jay) asking about the difference between an airline merger and take over. I am not a financial professional, but I want to try my best to point out the major differences. If you have any more to add, please feel free to leave a comment!
This is when two companies come together blending their assets, staff, facilities, and so on. After a merger, the original companies cease to exist, and a new company arises instead. Sometimes the new entity will take the name and brand from one of the airlines, but sometimes an entirely new brand can be created.
Delta and Northwest merged, leaving the Delta brand. United and Continental merged, which will leave the United brand. In mergers like these, management needs to work hard to come to certain agreements, figure what/who will be cut and how the new airline will operate. Of course, this can be a very complex process for both airlines to undertake.
TAKE OVER / BUY OUT / ACQUISITIONS
In a takeover, a company is purchased by another company. The purchasing company owns all of the target company’s assets including company aircraft, trademarks, routes and so forth. The original company may be entirely swallowed up, or may operate semi-independently under the umbrella of the acquiring company.
In the case of Southwest buying out AirTran, the AirTran brand will disappear and be absorbed by Southwest. It is not a merger and Southwest will own the assets of AirTran and have complete control. This process is easier than a merger, since management at Southwest has the final say, but they need to successfully share their culture with the employees at AirTran and make sure they feel welcome.
Alright, I hope that helps some!
A Frontier Q400 at Aspen. Check the Delta and United planes in the background.
Remember that one time, when I told you that Frontier and Delta would pull out of Aspen, leaving only United Airlines? Yea, now that is only partly true. Delta is still out of there, but Frontier will be sticking around for at least a while.
The same day that Frontier announced it would stick around at least through the winter, United announced it would add additional service.
Frontier was planning to be rid of their fleet of Q400’s that fly into Aspen, but due to leasing issues, three aircraft will remain available to fly for Frontier.
Who is this good for? Well surely the employees for Frontier who were told they were out of a job starting September 30th and now have work until April. It also is good for passengers, since the competition will surely keep fares lower. Probably United is the only one who comes out of this in a worse position. They assumed that they would become the only airline in town and started to increase flight accordingly.
Source: Aspen Times Image: frontierflickr
United Express CRJ-700 operated by SkyWest in Aspen (N724SK)
The beautiful resort town of Aspen! It might be beautiful year round, but most people will associate amazing skiing and snow with the town. To help bring skiers each year, three major airlines served the Aspen-Pitkin County Airport, but this ski season, there will only be one.
Frontier Airlines has been serving the town since 2008, using Q400’s. With Frontier’s new parent company, Republic Airways, wanting to phase out the Q400’s, they don’t feel it makes economic sense to fly their Embraer aircraft to the resort town.Frontier were trying to sell tickets over the winter to prove the route could be profitable, but they have decided to discontinue service as of September 30th.
Delta flew to Aspen from Salt Lake City and Atlanta and feel continuing the flights just doesn’t make economic sense.
Just because only one airline remains, don’t assume Aspen will turn into a ghost town. Even with the departure of Frontier and Delta, the town will only be losing 20% of their seating capacity. United Express will still be flying 12 daily flights from Denver this winter as well as three each from Chicago and Los Angeles and one daily from San Francisco.
The airport is planning a 1000 foot runway expansion in an effort to lure back Frontier and Delta. Since both airlines don’t see the economics with the smaller aircraft they are flying now, I am not quite sure how a longer runway will increase possible passenger loads.
Source: Denver Business Journal Image: Carrera Turbo