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Does bigger fly higher? Or is it a race to the bottom?

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American Airlines/US Airways merger
[dropcap]A[/dropcap] new mega-airline is underway, as American Airlines parent AMR and US Airways are finalizing details in a merger that is supposed to be announced any day, the Wall Street Journal and others report. The deal would create a new US airline gigant, with a market cap of $10 billion, and even surpass the newly formed United Continental. Not least important, apparently, it would take American out of its present bankruptcy protection status.


Would the merger do anything else? Well, it seems a few specific points are being discussed on blogs and among story comments. 1) the name of the new company, believed to be American, 2) where its headquarter will be located (probably Fort Worth, Texas), 3) how the companies’ boards will be merged as well (lots of ego here, one might suspect), 4) who will become CEO (even more ego there, though everyone expect the smaller US Airways- leadership to run the combined company), and, 5) how one Star Alliance airline could be combined with a former competitor within the One World alliance.

American is part of the One World, which has its base around the Atlantic — US Airways is part of the way larger Star Alliance, with most of its operations in emerging markets as China, South and Central America, points out in an analysis. The analyst draws the conclusion that American has least to gain from the merger, let alone its supposed exit from bankruptcy.

And there is more – one big question is actually what both companies’ customers would gain, according to people who know something about the airline market.

Writes Ed Perkins of the Chicago Tribune:

“(…) the larger question is what will happen to consumers if the merger goes ahead, since now that possibility is likelier than ever.”

He concludes, among other things:

• “Despite industry blather about ‘increased scope’ of a merged line, the main effect would be lessened overall competition.”

• “US Airways’ current policies and practices are generally anti-consumer. It is not at all innovative and it follows a strategy of gouging travelers to/from its major hubs. If the US Airways team does, in fact, control the merged outfit, you’ll suffer.”

• “The combined line would probably begin divorce proceedings from Star Alliance and code-sharing with United,” Perkins writes, pointing out that the downside of the new company’s part in OneWorld is “that British Airways, the most important partner, gouges frequent flyer award trips with stiff fuel surcharges.”


So, judging from this, there does not seem to be much in this deal for the ordinary customer.

Or, as the reader Alex Christy wrote in a comment:



The editor of the Traveling Reporter works as a business news editor, and is a frequent traveler. When not doing any of that, he spends time on his boat and tries to figure out where to travel next. Two of his top destinations are the Philippines and San Francisco. Email Erik! Follow the Traveling Reporter at Stumbleupon, Tumblr, Chime In, Pinterest, Google+, Weibo, Storify, Facebook, Traveldudes, Myspace.