Now that the Department of Justice has settled its anti-trust suit with American and US Airways, what can we expect to happen as frequent flyers?
- The deal is expected to close in December.
- US Airways will leave Star Alliance, quickly, and join oneworld. We don’t have a timeframe yet but it should be within a few months. That means if you want to book Star Alliance awards using US Airways miles, you will want to book those very soon. And any changes, once US Airways leave Star, will need to be onto airlines that are in oneworld instead.
- Once the two airlines are both in oneworld, they will also implement a partnership with each other, and they will likely make it possible to move miles back and forth between US Airways Dividend Miles and American AAdvantage. US Airways did this when they merged with America West, Delta did it with Northwest, and United did it with Continental.
- They will then implement reciprocal elite status recognition sometime next year, although handling upgrades for each other’s elites will likely take some time.
- Eventually Dividend Miles will go away as a separate entity, my best guess is in February or March 2015. That means unique Dividend Miles opportunities should be taken advantage of now — for instance you might want to sign up for a US Airways co-branded credit card, as that’s a bonus you won’t be able to get again later. Buying up US Airways elite status in the back half of 2014 could have a strategic play for 2015 American Airlines status as well, which no doubt I’ll explore in greater detail in the not to distant future.
- I think we can expect that the combined frequent flyer program will have four tiers, all of the other major ones do, and they aren’t going to penalize US Airways Platinums with lower status.
- This is controversial but my bet is that the US Airways domestic upgrade scheme prevails — unlimited complimentary upgrades for elites. Otherwise that would be seen as a major benefit ‘taken away’ from US Airways Platinums, Golds, and Silvers (even though a ‘paid for’ upgrade scheme, of which American has the last in the US, means lower tier elites are more likely to actually get upgraded when they request it).
- The best values in the US Airways award chart, like 90,000 miles business class to North Asia, will disappear. The award charts will get combined, and harmonized, starting off with the American chart but I expect to see increases where the US Airways chart starts off more expensive today (e.g. an increase in award pricing to South Asia).
- Eventually when airline operations are combined (probably February/March 2015) they will use the American Airlines passenger service system, which is better operationally. They will begin harmonizing inflight standards as well. Remember that — the new American Airbus A319s notwithstanding — American has more domestic first class seats today than US Airways does. We’ll see a future with fewer seats up front. US Airways also has less seat pitch (less room up front) and doesn’t serve meals on flights under 3 hours. There will be movement towards US Airways service standards.
- Nonetheless, they will find a way to make money off of the main cabin extra product, if only because both United and Delta offer coach seats with extra legroom as well and it would be hard to announce they will no longer offer it. Doug Parker will learn quickly that he can’t try things like charging for water in coach like US Airways once did.
There’s lots more to come of course and there will be tons of news and details get worked out over the coming months.
I didn’t want this, and as an American Airlines Executive Platinum I am nervous about the future. But at the moment this looks like the best place to be for a frequent flyer, merger risk and all.
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