The American Airlines/US Airways merger is finally going through after many months of speculation and negotiation. Both airlines’ boards approved an all-stock merger yesterday and the two airlines will become one. How will this affect the average traveler?
The merger will form the world’s largest airline by passenger traffic and will enable them to compete better with Delta and United Airlines. Mergers are a trend over the last few years in the American market. Delta merged with Northwest Airlines four years ago and United and Continental did the same two years later. Six of the world’s largest airlines have now combined to form just three.
The immediate impact of the merger should be minimal. For now the airlines will maintain their individual identities and schedules. However, it is expected that by the third quarter of 2013, the airlines will be operating as one under the American name. The current claim is that hubs and route structures will remain in place.
The reality is that while things may stay intact at first, as it did in the case of the previous major mergers, eventually changes are inevitable. One certainty is that less competition leads to higher prices and this may be especially true on routes where US Airways and American currently compete. Less major airlines in the market also gives more opportunity for route domination by the three new superpowers. Some long-standing nonstop routes that are deemed unprofitable will disappear, even though the separate airlines may have kept them alive for landing slots and market share purposes. The already expensive international flight market may be the hardest hit. Smaller, yet significant competitors like Southwest and JetBlue will help keep some prices down domestically, but the few airlines that offer lower fares internationally will not be able to compete on the most lucrative nonstop international routes.
On the other hand, there may be some good news for travelers belonging to both frequent flyer programs. Dividend Miles and AAdvantage will eventually join together and likely combine your existing points from each. In addition, some destination may be easier to reach with more combined options for seamless transfers in the combined list of cities served.
It has been an ever-charging landscape in US commercial aviation for the last five years and a real battle between three giant and powerful airlines, American, Delta and United, is going to keep things interesting for years to come.