American and US Airways Unite... For Better or Worse?

A little less than five years ago, breaking news around the United States was the merger of Delta and Northwest.  This announcement verified all the rumors and talks throughout the industry.  This past week, we saw two more airlines, American and US Airways, announce a merger that would create the "World's Largest Airline."  With this announcement, a number of questions arise; these questions are not only from employees within the companies, but from consumers who utilize the airways.

The American Airlines and US Airways merger, like the Delta/Northwest, did not come as a surprise to many of those who follow the commercial airline industry.  The question is, will this merger be beneficial to the consumer, the person deciding whether to fly American/US or with another airline.  There are some who believe the merger will not provide any additional benefits to fliers of AA/US, only higher prices and a nice story.  Even with the articles stating the pros and cons, as a consumer I know what I look for.  There are three major things that many people look for when shopping for an airline ticket: out-the-door price, duration of flight or number of stops, and departure/arrival time.  In my opinion, consumers are going to go for the best deal.  Before the internet, airlines relied on loyalty and returning customers.  In today's world, I can set up alerts for low-fares, "bid" on seats, and get refunds from some travel sites claiming the lowest fare.  Despite the fact that the merger reduces the number of major airlines in the United States from five to four, the big three (American, Delta, and United) still must contend with Southwest, who are known for their cheap flights and limited travel fees.  Looking at the big picture, with fewer carriers, consumers have fewer options in terms of who to fly with and cities they service in addition to the possibility of higher ticket prices. (Mouwad, 2013)

Another topic that has been covered in past mergers and one that has already been mentioned in this merger is the question of how pilot seniority will be dealt with.  The merger of any two companies, regardless of the industry, will see this in some way; the aviation community, however, has to deal with pilots.  Different companies have different requirements as far as experience and time with the company.  Before the merger was even announced, both unions representing the pilots of American and US Air had drafted memorandums of understanding.  There are already talks of how the seniority integration will work and, while both sides are optimistic, US Airways is still tied up with seniority issues from their last merger with America West.  The reason why seniority is so important is because of promotions, it determines what plane a pilot flies, whether that pilot is captain or first officer, the ability to get advantageous scheduling and time off, and pay for certain assignments. (Carey, 2013)  While this part of mergers is important, I think it would be hard to set an industry standard.  There are a lot of different factors in regards to how the unions work together, the sizes of the companies merging, and what each side is willing to give and take in the process.  Ultimately, a common ground must be reached, I just don't feel as though the industry can step in and say, "This is exactly how you will set up the seniority list."

The final step for the merger is to be approved by the Justice Department's antitrust division.  Many are confident that the merger will pass through without a hitch, however US Airways has been stopped from merging before.  In 2001, the merger between United and US Airways was stopped.  The Justice Department said that the merger would limit choices to consumers and raise prices.  While both of these are concerns today, mergers similar in size to this have been approved with no problems.  The Justice Department antitrust division is an important part of the process because of their ability to prevent companies from monopolizing a certain market.

I am fortunate enough to already have a job lined up after graduation that has nothing to do with airlines but it is something that I have taken interest in.  With all of the mergers that are already in place, it makes me question whether or not "big corporation" life is for me.  I know that with big companies comes a lot of room for advancement and growth, but that can also allow people to slip through cracks. With mergers, pilots are most likely to keep their jobs; management, on the other hand, is not an area that will also need to be doubled in size.  While commercial aviation will grow over time, I believe corporate aviation will grow as well.  When looking at the two, I would go with corporate.

Sources

Carey, S. (2013, February 8). US Airways pilots approve merger integration process. Retrieved from: http://online.wsj.com/article/SB10001424127887324590904578292401183882548.html

Koenig, D. (2013, February 14). American, US Airways merger creates world's largest airline. Retrieved from: http://business.time.com/2013/02/14/reports-american-airlines-us-airways-to-merge/?iid=biz-article-latest-ap-widget

Maxon, T. (2013, February 8). US Airways pilots approve transition deal for prospective American Airlines merger. Retrieved from: http://www.dallasnews.com/business/airline-industry/20130208-us-airways-pilots-approve-transition-deal-for-prospective-american-airlines-merger.ece

Mouwad, J. (2013, February 14). Service cuts may follow merger of airlines. Retrieved from: http://www.nytimes.com/2013/02/15/business/airline-consolidation-may-be-costly-to-travelers.html?pagewanted=all&_r=0

Tuttle, B. (2013, February 14). What can consumers expect from the American-US Air merger? Nothing good. Retrieved from: http://business.time.com/2013/02/14/what-can-consumers-expect-from-the-american-us-air-merger-nothing-good/