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February 15, 2013

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Jon, the deal raises two questions for me:

- Where was Gov. Jan Brewer on this merger? She has made economic development a cornerstone of her administration. Did she fight to keep the airline here? Did she lobby Parker to keep the headquarters in Tempe? And how does this loss of jobs compare with the number of jobs she has been able to bring here?

- Will Phoenix lose its position as a hub for the airline? If so, that's going to mean more trips through airports like Dallas and Chicago for Phoenix residents heading out of town. It also would be a blow to the tourism industry if nonstop flights to Phoenix are cut because it's no longer a hub and the tourists have to travel to other hubs, such as Dallas, to get here.

I worked an event at the herberger (maybe children's theater fundraiser or something, some Disney star was there) and one of the valets damaged Parkers car, the event peoples obviously got upset because he was the largest contributor. The fact I can't recall what the event was probally goes to show that it wasn't any "real" arts program, or one significant.

MAJOR BLOW TO PHX, SKY HARBOR and "TOURISM"
Its always Sunny in new Cleveland

No doubt top management of the new American will hold seasonal conferences in Phoenix. World class golf and all.

Is anyone surprised that Dallas would be chosen over Phoenix? At no commercial or cultural level can Phoenix compete against Dallas.


John raises excellent points. However, the bubble in which she and her co-ideologists live prevents such reality-based examination. Protecting the status quo -- with even lower taxes, if possible -- is one goal. But mostly policy is informed by dogma that is either false or inapplicable to the challenges facing a populous, urbanized state.

Texas plays serious economic development, especially to attract and retain high-end economic assets. It goes after major federal money. It doesn't just sit there and assume the weather will solve everything that low taxes won't.

BTW, Dallas has the largest light-rail system in the nation.

Good points Rogue. It is surprising how far the light rail goes north well past the wealthy suburbs of Dallas.

The unfortunate part of the Texas story is that the apartheid white right will continue to extract far more than it delivers. This excessive explotation will continue until they are pushed out. The hope at that point is that the local government institutions can be salvaged.

Arizona at this point has better local government institutions but its federal elected officials earn an F minus for bringing home the bacon. They are so very ideologically pure.

Tho I left the travel industry six years ago, I know the merger or America West and US Air was a negative for America West _ they got the routes, equipment and the personnel; but also the customer service and baggage handling. I never tired(?) of the complaints about US Air.
Now with American, they get the acknowledged worst customer service (and flight attendants)in the industry, not to mention not-so on-time service.
Does the merger of two, low-class (tho large) carriers equal progress ??

That sucking noise is $$$$$$$$$ leaving the "Valley of the Sun"

Well Ed, "the Good News" is that Phoenix is going down in flames sooner than anticipated. Not long before we can sow them Sahuaro seeds.

Jon, Not much has changed with cal Lash the old Cabrone. My memory fails me when I first advised you I was in favor of blading Phoenix from the Arizona canal to South Mountain and planting Saguaros. Phoenix of yesteryear is gone. I suggest you divest yourself of Phoenix and spend the remainder of your presence in the land of water as we are mostly H2O.

I have come to the point that, the current pols have no vision beyond what is in it for me, now. For many their vision is blinded by a fantasy that “after death” they will enter a land of eternal bliss. So fuck earth. It is impossible to talk to these idiots. Maybe it’s time for the Sierra Club and Militant agnostics to declare war on the kooks. Screw this being nice crap.

A talking head on TV said that there would not be any response from the feds regarding anti-trust because other mergers had not raised ticket prices.But what about the humongous decline in service from these airlines?They know you have nowhere else to go as service is dismal industry-wide.When you have no competition,you can let service slide and set back and collect your profits,knowing that the customer really has no choice. The same thing has happened to health insurance and cable services.A few corporations have split up the business nationwide and you have a very limited choice and very high prices.

Why fly? When you and Jack can be "On The Road"?

And the religious nuts just get nuttier.Please god lift these whackos out of here.

jushttp://www.motherjones.com/mojo/2013/02/freedomworks-panda-hillary-clinton-sex-video-response-investigationt get nuttier.

Like cal says, don't fly.

You have a choice.

I used to fly 20 to 25 times a year.

Now i fly zero times a year.

Phone. Teleconference. Webinar.

No need to fly.

Screw the airlines and the cattle they transport.

Long time lurker and fan.
Any draw down by US/American will be back filled as demand warrants, by Southwest, Spirit, or perhaps another carrier. It will most likely be covered by regional carriers (Mesa, Skywest, etc) much as the smaller western routes are now by US Airways. Fares will stay low because that is all Phoenix can support. You might see some additional service at Williams but it will not live up to its hype.
I would also like to add that Phoenix only ended up with US Airways by timing and circumstance, the east coast would have been better suited for its corporate location, as it was/is primarily an east coast airline.
In closing, the cheap oil of the 80s and deregulation turned the airlines into a bus service and is the primary reason passenger rail service never had a chance. Along with our interstate system and $1.00 gallon gas. Now we can play catch up, or fall behind for good.
Sorry for the long post, and keep up the great work.

Now comes Warren on the rails

Note the Republic Editorial Board's endorsement of the merger, saying "We understand the dynamics of the commercial-passenger airline industry." Last I looked, there wasn't a financially-savvy journalist on staff.

You nailed it, "100 Octane".

Oh oh.

Looks like FAB 42 at Intel is being mothballed before it comes online.

3.5 billion into the project and engineers and technicians are being let go.

Retirement packages are being pushed on older workers.

Since Obama and Brewer took credit for this project will they now take credit for its demise?

FABS in Scotland and Oregon still going forward. Why a no go in AZ?


Reb. is that A rhetorical question?

Hiding out on the web. Not possible. the code names on blogs remind me of vanity plates. Most any 19 year old puter savy kid can track down who you really are. I been in the biz since 59 aint nobody that hides forever.
I really am cal Lash

Jon,

I understand your point and don't disagree. But I feel the airline industry is dying; that before too long, huge government subsidies will be necessary to keep planes in the air, routes open, the number of flights convenient enough, and airports themselves alive. This idea comes from the increasing costs of flying due to security fears and requirements, insurance, and most importantly the costs of fuel. All of these costs will continue to rise until only the support of the feds will keep the airlines alive.

Once upon a time only the wealthy flew.

Not long now Jared before we will return to a on foot hunter/gatherer planet.

And the dogs sat at the camp fire and debated whether man had existed and Robbie the Robot smiled and looked upward to the skies.

If all of the exigencies involved in operating a commercial airline were on the books they would not be able to maintain even the pretense of appearing to be a profitable, private enterprise in its current manifestation as a "popular" transportation medium.

Ever. In the past, in the present, in the future.

Couldn't agree more with you about the Republic Editorial Board's cheerleading about the merger and general lack of understanding of economics and business.

Here's what a leading airline analyst predicted: "US Airways operates a major hub in Phoenix while American operates a connecting hub in Dallas. Brancatelli suspects the merged airline will cut flights to Phoenix, making Dallas the primary hub for the region.

That's going to be a blow to the Phoenix economy, particularly tourism. And I can't wait to see the Republic higher-ups flying to Virginia via Dallas.

Ah! I've been interested to read your thoughts on the merger. I don't have a lot of optimism about its impact on Phoenix, that's for sure.

Someone above mentioned the general decline of the industry. Here's a thought - is this a time for an airline to go the same route as some journalism outlets and consider operating as a nonprofit? I know that's really far out there, but ...

AZReb... Tell more about Fab 42!

I posted all I knew. That's why I asked the question why the AZ project was being stopped, but not the other sites.

"At no commercial or cultural level can Phoenix compete against Dallas."

That Phoenix can't compete culturally against Dallas is truly pathetic, but true.

The "decline of the industry" is primarily from overcapacity, which has been corrected somewhat with the last two mergers and the 2007-2008 crash. Without the America West/US Airways merger, AW probably would had trouble surviving on their own, due to their small size.
This merger will have less impact on tourism then SB1070 or the embarrassing politics of this state. The people who admire Brewer for wagging her finger in the face of the POTUS don't get out much.
To Cal Lash....the politicians who "have no vision" are a reflection of the general population. And "On The Road" is fun, but I prefer to travel with Charley.

Octane, ur right on pols
re flying, I cant get that high anymore

Nice column. I especially liked the merger expose.

Isn't "PetSmart" a Fortune 500 company based in Phoenix (19601 N. 27th Avenue)?

Seattle actually only has four (it's the state of Washington that has eight Fortune 500 companies).

Seattle does have powerhouse philanthropists such as Amazon.com and Starbucks, but I doubt that either Nordstrom or Expediters International of Washington contribute especially to arts and charities.

http://money.cnn.com/magazines/fortune/fortune500/2012/states/WA.html

Also, some of the Arizona companies you mentioned are definitely socially active:

"National Bank of Arizona (NB|AZ) will host one of Arizona's most pivotal statewide nonprofit events on Sept. 27 with the Nonprofit Leadership Forum.

"Spearheaded by National Bank of AZ and co-funded by Freeport-McMoRan as part of a new long-term strategy to help shape the future of the Arizona social sector, the event is the first of its kind to unite more than 200 key decision-makers and leading influencers working with the state's nonprofit community."

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=anwazG6fQS3Y

I suspect that others in the Phoenix list are as well, though I don't have the inclination to research each one and separate press-release hyperbole from significant contribution.

My view of pretty much all corporations is that they are in it for the bottom line and, like the wealthy magnates of yesteryear, their philanthropy exists largely as a form of marketing and political lobbying.

The real question is why so many in Texas? Well, for one thing the economy there is huge: as of 2010 Texas was ranked 2nd in a list of states ranked by GDP, compared to both Arizona (18th) and Washington (14th).

For another, Texas has oil and a large percentage of the Houston-based companies on the list are energy companies:

http://money.cnn.com/magazines/fortune/fortune500/2012/states/TX.html

The same is true for many of the other Texas cities on the list.

I believe this image is what cal's link was reaching for:

http://img716.imageshack.us/img716/8871/abbeyquote.jpg

Just fyi, I refer to metropolitan areas, which is most meaningful from an economic standpoint. Thus Microsoft is metro Seattle (if Redmond sat in the middle of Washington state and not attached to Seattle, the company wouldn't be headquartered there). And actually Nordstrom does provide a good deal of local stewardship.

As for Texas, Dallas and Houston have long been corporate centers because of oil. But the state has spent years on big incentives to lure new HQs and retain the ones it has.

Thanks for that clarification, Mr. Talton.

"The combined American Airlines/US Airways will move its headquarters to Dallas-Fort Worth."

Some airlines seem to be buying their own refinery as part of a new vertical integration strategy to reduce fuel costs:

http://oilprice.com/Energy/Energy-General/Delta-Airlines-Buys-its-Own-Refinery-to-Cut-Fuel-Costs.html

I can't say what, if any, relationship this has to the decision to move the corporate headquarters to Dallas/Ft. Worth, but at least superficially, it seems plausible that it is an attempt to cinch supplies of West Texas International crude oil (WTI), which is currently priced $22 less per barrel than Brent crude and is trading near the price of Bakken oil mentioned in the article about Delta.

Texas has the oil and the infrastructure in place and may give preferential treatment to companies headquartered in the state. Something worth looking into, perhaps...

Would like to mention that by most metrics, American is double the size of US Airways. Also they are a little bit more homogeneous, as US Airways is the result of years and years of mergers (US Air, PSA, Piedmont). An attempt to merge with American and move the headquarters out of Dallas would have met with certain failure. They also were the last carrier to outsource maintenance, although that is in the process of changing.

Mr. Talton wrote:

"Just fyi, I refer to metropolitan areas, which is most meaningful from an economic standpoint. Thus Microsoft is metro Seattle (if Redmond sat in the middle of Washington state and not attached to Seattle, the company wouldn't be headquartered there)."

Probably what confused me was this:

"Arizona's five Fortune 500 headquarters — Avnet, Freeport McMoRan, USAirways, Republic Services and Insight Enterprises — do not fill these roles. Only one is located in the central core."

Redmond should certainly be included in metropolitan Seattle. But it's 16 miles away, which means it's 16 miles too far away to be located in Seattle's central core.

Thanks for that info, 100 Octane. It seems relevant.

Emil, another Fortune 500 in metro Seattle is Weyerhaeuser...it is in the suburb of Federal Way which is 22 miles from Seattle's central core.

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