Implications Of American And Us Airways Merger

By Author: Steve Robinson
Total Articles: 468
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Many fliers are anxious to see what impact the merger between these two airlines will have on cheap travel options, including cheap airplane tickets, cheap vacation packages, discount travel packages, as well as other flight benefits.

The following are some of the things to expect as a result of this merger:

• Each frequent flier program will continue to operate separately until sometime after the deal is finalized in several months. Ultimately they will be combined with US Air’s Dividend Miles members becoming members of American’s AAdvantage program.

• US Air fliers currently are able to redeem miles on United Airlines because both airlines are part of Star Alliance. Once this merger is finalized this benefit will go away.

• Some experts recommend redeeming miles prior to the merger since they expect the combined frequent flyer program will be less generous.

• Airline ticket prices are not expected to rise. Fares have risen less than 2 percent a year since 2004, despite a series of airline mergers since then. In the last decade 10 major airlines have been reduced to four.

• One ...
... of the biggest concerns about this merger is the impact it will have on service given that historically combining airlines has proven complicated and difficult, with technological problems common. Changes to employees work conditions or fears about their jobs often impacts employee behavior. Complaints about lost bags, problem reservations, and delayed or canceled flights usually increase dramatically particularly immediately after reservation systems are combined.

• Although American and US Airways have promised to retain all hubs, experts think the US Air hubs in Phoenix and Philadelphia are at risk because of their proximity to larger American hubs such as Dallas and New York.

This deal is expected to be the last major merger for the foreseeable future. The four large airlines that will be left flying after this deal (the new American, United Continental, Delta Air Lines, and Southwest) are each large enough that any future combination between them would most likely be blocked by antitrust concerns.

Restriction on foreign ownership of airlines makes deals between airlines in different countries difficult. This is one of the reasons why Delta is only able to own 49 percent of Virgin Atlantic.

Some contend that American Airlines had to approve this merger in order to compete with its larger rivals. The fact is that size does not assure its success as witnessed by dinosaurs.
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