This week's big travel news is the proposed airline merger between American Airlines and U.S. Airways. While the deal still needs to be approved by Federal regulators, it inched closer to being a done deal when the Boards of the two airline giants reached agreement on the merger on the eve of Valentine's Day.
If approved, there will four major carriers left standing after the latest series of consolidations that have taken place—-between United and Continental, Southwest and Air Tran, and Delta and Northwest, and now American and US Air. The new entity will be called American Airlines and is likely to become the largest airline in the world.
Here are some predictions (some contradictory) from business, airline and travel experts on the merger and how it will alter the travel landscape:
1) Less Competition - From the travel tech website, Tnooz
"What may go down in history as the second St Valentine's Day massacre, the merger creates an elite number of players who can perform in a closed system… For the consumer, low-cost will be a distant memory."
2) Fewer Direct Flights – From airline industry expert Rick Seaney, CEO of FareCompare.com
"Both US Airways and American employ a hub-and-spoke model and their hub cities don't overlap…However, the only folks who will be flying non-stop are those heading to a hub city, or those who live in a hub and are traveling to a spoke-city. Another way to look at it is there are about 9,900 routes where American and US Airways…Yes, fewer people travel those routes, but that is little solace if you happen to reside in one of these cities."
3) Fewer Choices - CNN Money
"The four carriers would fly about 80% of the passengers on U.S. airlines. For a third of the top 1,000 routes, passengers would have just one airline option if they want to fly nonstop. Nearly half the routes will only have two choices."
4) More Stability - From Slate Money Box
"U.S. Airways and American merging to create four robust big nationwide airlines along with a few regional players is probably better than two big airlines, a few regional players, and two trapped in-between and constantly at risk of going bust."
With Dallas Fort-Worth as the new corporate base, the merger may cause the Phoenix area (where U.S. Airways corporate office was housed) to take an economic hit.
5) Downturn in Service – Also from Tnooz
"[American]…has pursued a strategy of premium international travel, new plane orders, cabin upgrades, and fare bundling (as a contrast to fare-unbundling, American's current approach is to up-sell you on additional features, not take away currently "free" features and charge you separately for them)… A US Airways management take-over of American is likely to further gray that line, with a tactical de-costing of American's model to more resemble US Airways' profit enhancing policies of the last five years."
6) Buying Tickets and Using Airline Points - From Travel expert Johnny Jet
"Once the airlines are ready to combine, the newly merged carrier would honor all future tickets sold on either one…Your miles are secure and existing miles will continue to be honored…It would take several months, but the carriers would eventually consolidate their frequent-flier programs and merge the accounts of fliers who have miles with both airlines."
7) Timing - From a Letter from Tom Horton, CEO of American Airlines
"American and US Airways combine two highly complementary networks with access to the best destinations throughout the U.S. and around the globe. Together we will offer our customers more than 6,700 daily flights to 336 destinations in 56 countries by maintaining all the hubs currently served by both airlines…We expect the merger to be completed in the third quarter of 2013."
Another pressing concern for consumers, of course, is the pain of the integration process that has been experienced with other recent airline mergers. After the dust settles, we will have to wait and see. Since deregulation of the airline industry, one thing that has been constant is change.
For more questions and answers about the merger, see: American Airlines