Orange County travelers using John Wayne Airport could face changes in routes and fares, and maybe see some new carriers at the airport if the pending $4.3 billion acquisition of US Airways by United Airlines is approved.
While US Airways currently only operates two daily non-stop flights from John Wayne (both to Pittsburgh) compared with United’s 20, Justice Department approval of the US Airways acquisition is expected to unleash more consolidation like that seen regional airlines Pacific Southwest, (PSA), AirCal, and Western disappear in the ’80s.
In that wave, decreased competition led to increased fares and the dropping of service from OC to some destinations, particularly Northern California. Some predict a similar outcome in any new wave of acquisitions.
“Any more consolidation in the industry would be an atrocity for consumers,” said Steve Sedgwick, president of Foothill Ranch-based First Class International, whose agency is about 80% corporate travel business.
Most airline analysts believe if the United-US Airways deal is approved, it would create momentum behind an American bid for Northwest and a Delta pickup of Continental. All those airlines operate out of JWA. Post-acquisition realignment of service likely would result in reductions of service to some destinations, such as US Airways flights to its hub in Pittsburgh or Continental flights to its Newark hub. Higher prices could result from the reduction of competition on routes out of JWA or, more indirectly, by a reduction of competition at other airports,for instance, a pickup of Continental would increase Delta’s dominance in Atlanta and could allow it to increase fares to that city.
While United has promised to hold the line on fares for two years (except those necessitated by rising fuel costs or inflation) and add 93 new non-stop flights nationwide,at least one of which would be a Washington, D.C.-Orange County flight,industry insiders remain skeptical.
“That’s a PR spin to get the deal (approved),” Sedgwick said.
On the East Coast, where US Airways is dominant, several state attorneys general concerned about decreased competition are meeting on their own with airline executives. And a 1999 GAO study suggested that proposed airline alliances could lead to higher prices and decreased competition.
But Jim Trainor, a spokesman for Lincoln Mercury in Orange County whose staff does significant travel to markets served by Northwest and US Airways, among others, has a different take.
“I don’t think we’ll notice one single iota,” he said.
Trainor said the company, which uses American Express as its corporate agency, most often uses the lowest available fare, regardless of the airline.
“We appreciate what John Wayne does for us (in convenience),” he said. “But it is what it is, and we accept its limitations, too.”
And the acquisitions could prove a boon in the short or medium term to corporate customers by pooling their frequent-flier miles with the affected airlines.
At JWA, acquisitions also could affect the allocation of takeoffs and landings at the airport. The allocation of the limited number of slots,a complex process at John Wayne because of noise and passenger restrictions,must be approved by the county supervisors.
The Slots Game
One possible scenario would be that United would be awarded US Airways’ capacity, American would get Northwest’s capacity and Delta would get Continental’s slots. That would give American 38 daily non-stops, United 22 and Delta 18.
America West Airlines,which United tried unsuccessfully to buy two years ago,also has 22 daily flights from John Wayne, serving Phoenix, Las Vegas and Sacramento. American competes on the Las Vegas route, but otherwise America West is unopposed, and fares to Phoenix and Sacramento from Orange County are higher than from LAX or Ontario.
A second possible scenario is that other airlines that have the first right of refusal on newly available capacity would be awarded some slots once the acquisitions are complete.
Holding Pattern
In a third scenario, airlines on the waiting list for John Wayne could gain entry.
At the top of the current waiting list for slots at John Wayne is Air Canada, which earlier this month launched service from Ontario International Airport in the Inland Empire to Ontario, Canada.
John Reber, a spokesperson for Air Canada, said the most likely service would be a John Wayne-Toronto route using an Airbus A319.
Second in line for slots at John Wayne is Honolulu-based Aloha Air.
An Aloha spokesperson confirmed the airline’s interest in the Orange County market, but said it is one of several markets under consideration and further details have not yet been determined.
Other airlines on the waiting list at John Wayne are Westates, a commuter airline, and Frontier Airlines.
County supervisors meet each year to confirm specific airport capacity,and slot allocation if appropriate,for the following April 1 through March 31.
Should any or all of the acquisitions be approved, the fate of US Airways, Northwest or Continental’s local employees could also be in question. Together, the airlines employ between 150 and 250 at John Wayne.
