The American Airlines, US Airways merger has been brought back to the front page as the Justice Department recently announced it’s filing a suit to block the merger.
This is the fourth instance in the past six years in which two US airlines have planned a merger, and travelers are bracing themselves for a bumpy ride with fare hikes, consolidated loyalty and reward programs, and reservation system changes.
Ticket Prices: What’s the Damage?
If the government backs down, or if a court approves the merger, American Airlines would be the largest airline carrier in the United States. The airline industry and the government agree: If this happens, travelers should prepare for higher ticket prices as all airlines will have less incentive to offer cheap fares. American, Southwest, Delta, and United would make up 80% of the U.S. market. While travelers might not notice an immediate price hike, over time these mergers usually lead to reductions in the total number of flights, and fares subsequently rise.
Love Thy Neighbor
In addition to fewer flights, past precedents have shown that consolidation often results in smaller planes filled with more passengers. Passengers on all airlines should be prepared for an increased chance of small talk and greater competition for the armrests.
Your frequent flyer miles aren’t going anywhere, at least not yet. If the merger goes through, the new American Airlines plans to absorb US Airways’ loyalty program, Dividend Miles, which houses more than 100 million members under American’s program, AAdvantage. All frequent flyer miles under each Dividend Miles account will be transferred to AAdvantage at an equal rate.
The new American Airlines has said it would offer 6,700 flights daily to 336 destinations, an astounding number for one airline. However, “destinations” refers to where passengers end up, but it does not take into account the number of connections it might take to get there. The two airlines do have several connection hubs in the same area, meaning that flights to smaller airports or underperforming cities may be reduced or canceled altogether.
Airline Fees No Longer Just Nickel and Diming Passengers
Travelers hoping for a break in fees for checked baggage or priority boarding and seating will continue to be disappointed if the merger is approved. Both the existing American Airlines and US Airways currently charge additional costs for these amenities, so don’t expect to see them going away anytime soon. In fact, the government cited fears over airlines increasing fees further as a strike against the merger.
So What’s the Good News?
By consolidating, American Airlines and US Airways have made clear they intend to aggressively target business travelers with better service, amenities, and flight schedules on major business travel routes. To counteract the merger, the remaining airlines will step up their game for business travelers--a trend that’s already begun with the installation of lie-flat seats on international routes.
Of course, customers paying more for flights means airlines make more money. And long term, that should reduce the incredible number of bankruptcies the airline industry has experienced. That’s good for customers, who won’t have to wonder whether their favorite airline will exist next year.
[Image: Flickr user Aero Icarus]