Lots of folks are going to be complaining about this merger — consumer activities who will say that fares are going to go up, frequent flyers worried about losing their benefits. Most of the scare stories won’t come true.
Fares probably won’t materially change as a result of the merger although once the merged airline shrinks relative to the size the two airlines would have been on their own the reduction in supply may have an effect on price.
But it’s important to realize that mergers are both good and bad, and which arguments you find persuasive probably depend on who you are and how you will interact with the changes.
American frequent flyers.
- Nervous because US Airways has fewer first class seats on their narrowbody aircraft and doesn’t provide meals on 3 hour flights.
- Worried because US Airways has done a lot of study of revenue-based programs.
- Worried because US Airways customer service agents just don’t seem all that professional or happy, at least in the Northeast.
US Airways frequent flyers.
- Hopeful they get those gorgeous 8 ‘eVIP’ systemwide upgrades that American Executive Platinums get (while American’s 100,00 mile flyers worry about losing them).
- Salivating over actual food on airplanes (bags of chips don’t count). Those US Airways elites are HUNGRY!
- Sad that they’re going to lose 90,000 mile awards for business class to Hong Kong but they were going to lose that anyway with the coming devaluation. (If anything a merger puts off some of the bigger devaluations they would have seen, for awhile anyway.)
Travelers writ large. Are going to have to suffer through another IT disaster from combining the two carriers. Even Delta-Northwest wasn’t pretty, although it was the best of the recent big mergers. America West-US Airways was really rough. But United-Continental, most recent in our minds, was an absolute meltdown. There won’t be fewer delays because of the merger. Telephone hold times won’t be shorter. And there’s a real risk that those metrics could get much worse when they actually try to combine the airlines.
American’s creditors. Pretty sweet deal with 72% of the company.
US Airways shareholders. Getting kind of hosed. Parker overpaid because he wanted to be king and rule the biggest airline. American has value but probably not at the price, and many will wish they had just grown organically rather than merging and bringing with the deal much higher labor costs for the whole operation (including the legacy US Airways operation).
Doug Parker. Homeboy gets to run the biggest airline. Feels like the king of the world. He’s superman, as-described by Jason Lee in a Kevin Smith film.
Horton. Gets a Who. Or a golden payout. Deserves to be remembered for the good job he did in restructuring, and in negotiating a great deal for his creditors. But in the end probably won’t be remembered at all.
Long-term viability of the assets. Phoenix will shrink. Charlotte is at risk. Those US Airways hubs weren’t so great after all. Costs will rise, all of the pilots will be making more money but fare probably won’t rise enough to cover it. The costs to combine the airlines will be greater than anticipated, the savings less than anticipated.
In the end, “we” will all survive. But some of us will be better off than others as a result of the merger, and in some cases we just have fear of the unknown with fairly educated speculation giving us an idea of whether we’ll likely be better or worse off. Our view of the merger, though, really does depend on what hat we wear in all of this.