America West is reportedly looking into purchasing ailing carrier ATA. While it may seem slightly insane (slightly?) for an airline to acquire another, flailing airline at this point in time, there are some legitimate reasons why this merger could work:
–ATA has 14 gates at Chicago-Midway that would help America West build out a hub in the midwest, something they were unable to do on their own in Columbus, Ohio.
–ATA has a bunch of new 757s that (I’ll give the Wall St. Journal credit for this tidbit) have overwater certification, that will allow America West flights to the Caribbean that they currently can’t operate.
–The new planes would also allow them to build up new routes with greater frequencies; large carriers often compete with lowfare carriers on new routes by throwing additional capacity at the route.
That all said, there have been VERY few airline mergers that have worked. A recent Wall St. Journal (reg req’d) article notes that Continental had been considering a link-up with United, a move that makes sense on paper and no sense in reality. America West, itself, is struggling of late and this merger will take its eye off the proverbial ball. ATA may not be any prize, as it faces extraordinary lowfare competition in Chicago and an insurgent Northwest in Indianapolis. My guess? If America West buys them, they keep the gates in Chicago, the planes, the military charter business, and they shut down Indianapolis and concede it to Northwest.