Why The American Airlines Merger With US Airways Is Under Fire

The American Airlines merger with US Airways is under fire. The reason is simple: a merger between these two airlines would create the largest airline in the world — an airline that would have the potential to monopolize the air travel industry. The Justice Department, as well as several states, have filed a joint lawsuit in order to halt the merger. According to USA Today, the Justice Department noted that a merger between these two airlines would give the merged airline control over a whopping 69% of departure and arrival slots at Washington Reagan National Airport — that would be six times more control over the air activity of that airport than the closest competitor.
While other airline mergers have been successfully executed (United/Continental, Southwest/AirTran, Delta/Northwest), it seems as though the root of the problem with this particular merger is that it would be too big, perhaps too big to fail. It should be noted, however, that a USA Today article from December 2012 reported that despite gloomy speculations, none of the previous airline mergers raised fares as predicted.

American Airlines To Cram More Seats Onto Aircraft

As if squeezing into an economy-class seat wasn’t already a claustrophobe’s nightmare, American Airlines has announced plans to add even more seats to its planes, further encroaching on passenger legroom.

The carrier, which is trying to raise revenue following its merger with US Airways, will increase the number of economy class seats on its 737s and MD-80 fleet. The news came out after the airline’s VP of flight services made an announcement to the carrier’s flight attendants.

American Airlines says it doesn’t know exactly how many extra seats it will add, but airline consultant Michael Boyd told CNN that for the plan to be cost-effective, the airline would have to install at least 10 new seats in each aircraft. Adding what amounts to roughly two extra rows would mean taking 2.5 inches of legroom from each of the existing rows of seats.Freaking out yet? Well Boyd said passengers shouldn’t be too concerned at this stage. A slimmer seat design, along with changes to the bathroom and galley layout could save precious space. All up, he believes we might be left with about one inch less legroom once the new seats are installed. Still, it’s one inch too much for passengers who are already feeling the pinch.

US Airways And American Airlines To Officially Announce Merger

American Airlines and US Airways are set to officially announce their merger plans today, after months of speculation and planning. The joint operation between American, the currently bankrupt carrier based out of Dallas, Texas, and US Airways, the twice-bankrupt carrier based out of Tempe, Arizona, would form the largest airline in the world.

According to multiple sources, the airline would keep the American Airlines name while Doug Parker, the current CEO of US Airways would take the top management seat.

Full intentions of the merger are scheduled to be announced today in a 10 a.m. CST conference call in Dallas. Once the formal announcement has been made there are dozens of extra regulatory steps to be made prior to an official merger, including approval from the Federal Trade Commission, but most believe that the process will encounter little resistance. Complete joint operation is expected later this year or early next year.

As to how this will affect consumers, there is plenty of analysis in the airline community to read before going to bed, but the basics are pretty straightforward. With slightly less competition between carriers, consumers may expect to pay more out of pocket moving forward, but can expect a stronger airline better capable of handling economic downturns and volatile oil prices.

Based on previous mergers (among them, Delta and Northwest to form the then-largest airline) neither frequent flier program nor the miles therein will be gutted, but consumers can expect either AAdvantage or Dividend Miles to adopt the most cost-effective facets of the other program.
Until the airlines agree on all of the details further down the road, however, the community is only left to speculate on the full effects of the merger. Expect numerous updates as the year goes on.

[Flickr image via Fly For Fun]

Delta: single large airline looking for Virgin partner

I hope you haven’t become too attached to Virgin Atlantic. The airline has gotten its share of calls lately about potential mergers, but they are qualified with expressions like “early stages” and “far too early” to say anything about. This isn’t all that surprising, given the strength of its brand and the fact that the airline hired Deutsche Bank to help it evaluate its available growth opportunities.

Word on the street is that Delta is sniffing around, but neither Delta nor Virgin Atlantic would say anything about it.

The notion of a merger with an airline of Delta’s size is interesting, as majority owner of Virgin Atlantic, Sir Richard Branson, didn’t have much in the way of positive commentary for the British Airways/Iberia deal, which he believed would lead to higher prices and lower competition.

But, the aviation business is feeling the urge to merge, and analysts are saying that Virgin Atlantic needs a big buddy in order to compete effectively, the BBC reports.

[photo by eisenbahner via Flickr]

Five United Airlines non-answers about the frequent-flier future

United Airlines decided to dive into the weeds. Executives from the airline met with close to 200 members of the online forum FlyerTalkers to discuss some of the major issues they see with the carrier, according to USA Today. This may not seem like a bold move, but to put the company’s top dogs out in front of some of the highest-value customers comes with plenty of risk, especially for an airline recently named the second worst in the United States.

So, what was on the agenda? The frequent-flier program was of course top of mind, as many of the people in attendance hold elite-level memberships. Despite being pressed by customers and media, however, the United Airlines executives kept their lips sealed on future plans for the program.

Here are five key topics from the event:
1. How the merger will affect the Mileage Plus and One Pass programs: no details were provided on what will change. But, they are expected to come out in the next few weeks. Through 2011, according to USA Today, the programs will not be integrated, “though some streamlining changes will begin. Look for them to be integrated in 2010.

2. Doubling down for the end of the year: USA Today pushed to see if United would be offering any year-end double-elite-qualifying mile offers. The company was “noncommittal.”

3. A place to put your feet up: United would only say that a rebranding effort for its Untied and Continental lounges is “a possibility.” It may use one of the existing names – United’s Red Carpet or Continental’s Presidents Club – or it may not.

4. Slightly better seating: United wouldn’t reveal whether it’s premium economy section would be retained post-merger. Continental doesn’t have a similar offer.

5. Thresholds for top-tier: will it take 75,000 miles or 100,000 miles to become the top dog? Well, there’s still no answer.

So, United made itself visible and accessible, but it didn’t bring much to the table. This leads to the obvious question … why bother?

[photo by Deanster1983 via Flickr]