US Airways May Shed Gates in Charlotte

Kirby: "It's not inconceivable that we would have to give up gates in Charlotte."


Southwest(LUV:NYSE) has also noticed. In 2000, CEO Herb Kelleher discussed the possibility that the US Airways and United merger might involve divesting assets. He told a transportation conference that Charlotte was a city where, if regulators "said you have to give up half your gates, we'd be interested in looking at them."

Southwest's position hasn't changed. If Delta and US Airways are required to turn over assets to satisfy regulatory requirements, LaGuardia and Charlotte are both places Southwest might choose to serve, spokeswoman Beth Harbin said recently.

Requiring some Charlotte divestiture is not unlikely, says Mike Bell, who retired from Delta in 2004 as vice president of schedule development. During his career, Bell presided over scheduling and also evaluated the network efficiencies of mergers, most of which were never completed.

Of all the U.S. carriers, US Airways has the most overlap with Delta, and the situation is particularly acute in the Southeast, Bell said. "You look at the traffic flows over those two hubs, it is almost an identical overlay," he says. "There are only a handful of routes available on [Charlotte] and not [Atlanta]. The concentration could make the federal government say 'Charlotte has to go.'"

For a combined Delta and US Airways, a hub divestiture would have pluses and minuses. On the negative side, "You introduce a competitor, someone who would set up shop competing against the operation in Atlanta," Klevorn said.

As an offset, the combined carrier would shed costs. "A hub is a big cost item for an airline, not just another city you fly into," Salerno said. "You don't want multiple cost centers that are unnecessary in the same area."



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