On February 14th American Airlines and US Airways announced a merger that will surely shake the airline industry. Though the above picture is depicting the Bloomberg Businessweek cover about the United-Continental merger several years ago, it can provide some insight for this merger as well. Together American and US Airways will have 6,700 flights daily on 600 planes to 336 cities in 56 countries. Whether you’re going to Ultra Music Festival in Miami this spring break or want to get away from it all and head to the Philippines, the ‘New American Airlines’ can take you there from anywhere.
But like any big merger there are pros and cons to be looked at. Here’s what you should know:
– More destinations– as I mentioned before you can get anywhere almost anytime with the use of the new airlines many destinations.
– Nicer planes- More amenities, it’s as simple as that. Worldwide Wi-Fi, extra leg room, more food and entertainment choices
-Perks– New rewards structure may let you use miles for one-way flights or even cheap deals to fly somewhere exotic with your miles. Can you say Australia for 110,000 miles?
– Potentially higher fares– Though the leaders of this new “Franken-airline” claim they will soar to lower fares, simple economics tells us otherwise. With a larger market share which can serve customers virtually anywhere, this merger will in theory raise prices.
–Customer Competition- Think about the rewards programs for an airline, hotel, or really anything. There is an elite class of customers who swear by the brand and are treated like God’s gift to the business. Now with the merger of two large businesses, there is bound to be a clash between ‘platinum princesses’. Flying first class might not be as easy anymore for so many top flyers under in one plane.
In either case it looks as though this merger is going to happen. Both companies and industry experts say that this will not be blocked by the Federal Trade Commission. The question is whether after the merger the new airline will be able to maintain its massive size.
Should it be blocked? If not, what will end up happening to fares? Will they be kept low as promised or raised? Will the new airline succeed or fail?