After two big ones, airline mergers are no longer something for travelers to get excited about. And despite alarmist headlines, the pending linkup between bankrupt American Airlines and U.S. Airways may be less disruptive than prior mergers involving Delta and Northwest, and United and Continental.
But if the deal goes through, some fliers will still face rising fares, reduced service and various headaches as the two airlines combine their operations.
Airliner mergers typically involve the new, larger carrier consolidating operations at some of its hub airports, while winding down flights at other hubs. After Delta and Northwest merged, for instance, the old Delta hub in Cincinnati and the Northwest hub in Memphis lost service, while Atlanta and Minneapolis-St. Paul picked up some flights. And on routes where a merger eliminates competition, fares invariably go up.
The trade publication Airline Weekly conducted a detailed analysis of American and U.S. Airways operations and found that a merger would give the new, emerging airline--which would reportedly retain the American name--more market power than United and Continental generated when they merged, but less than Delta enjoyed when it joined forces with Northwest. "It's not going to be a doomsday scenario for consumers," says Seth Kaplan, managing partner at Airline Weekly. "There will still be a lot of choice for consumers in most markets."
The AW analysis found that these eight routes would effectively become monopolies, completely controlled by the new American:
Charlotte - New York (LaGuardia)
Washington (Reagan National)-Raleigh-Durham
Washington (Reagan National)-Nashville
The new airline would control most flights in three other markets:
On those 11 routes, nonstop fares would probably rise, unless the government required changes meant to establish more competition. But that's a small number of markets compared with other mergers, including some the government has rejected for anti-competitive reasons. Plus, fliers would still be able to find cheaper flights between those city pairs on other airlines, as long as they were willing to book a connecting flight.
When weighing a merger, antitrust regulators also gauge whether smaller cities that tend to be served by fewer carriers would lose competition and end captive to a single airline able to gouge travelers. But a U.S. Airways-American merger would produce little heartache at smaller airports. Airline Weekly found that a handful of small airports, such as those in Montgomery, Alabama and Monterey, California, would end up with less competition, because the two airlines already control a significant portion of flights and would no longer compete against each other. But in no instances would a merger produce a monopoly.
The new American would end up with eight hub airports--in New York, Philadelphia, Charlotte, Miami, Chicago, Dallas, Phoenix and Los Angeles. That's more than any other domestic airline. But most of those hub operations are either profitable or logical from an operational standpoint, so the new airline would probably keep most of them, with no disruptions for travelers.
The one exception might be Phoenix, which is now a U.S. Airways hub, since some of those flights could be rolled into America's huge hub at the Dallas-Ft. Worth airport. That would eventually mean fewer non-stops out of Phoenix, but it might also draw more low-cost service from discount carriers, such as Spirit Airlines.
The new carrier would offer beefed-up service to Europe, though not enough to dominate flights to any particular market, since many other carriers serve those cities. One change is that U.S. Airways would depart from the StarAlliance (which also includes Lufthansa, Japan's ANA and several other carriers), with the merged carrier remaining in the OneWorld alliance American currently belongs to (along with British Airways, Japan Airlines, Qantas and others). A few U.S. Airways customers might lose affiliated service to favorite destinations served by Star, but American has stronger linkups with its OneWorld partners, which serve a comparable number of destinations. For once, in air travel, bigger may turn out to be better.
Rick Newman's latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.