US Airways, American merger sparks fears of higher prices

Potential impact for air travelers


This is a rush transcript from "Your World," November 12, 2013. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: To Mark Murphy on an increasingly, well, interesting flying experience. Of course, he is the definitive expert on all things travel, The "Travel Unscripted" author.

And I think there are going to be a lot of people with unscripted comments on this.



CAVUTO: But what do you make of it?

MURPHY: So, it's good for the airline industry. You know, 85 percent of the traffic is now handled by four major carriers.

CAVUTO: See, that worries me right there.


CAVUTO: That worries me right there.

MURPHY: Which means fares will continue to rise. I mean, they're already up ahead of -- way ahead of inflation since 2009.

So all that is going to continue. So I don't think the flying public is going to get better options. I think they're going to get higher ticket prices. For the frequent travelers, they're going to have more options, because now you can use the miles as they merge the programs together between American and U.S. Air and have more choices on cashing those miles in. But that's really just for business travelers.

CAVUTO: Yes, but that can be sloppy, right, when Continental, United...


CAVUTO: I mean, it's how -- one hands off to the other could be an experience.

MURPHY: It was a mess.

CAVUTO: Right.

MURPHY: I mean, they had glitches. They really disrupted a lot of flights, a lot of delays.

That's going to be the biggest issue post the DOJ ruling, which they're going to -- the bankruptcy court ruling -- this is going to get done. And then they have got to integrate systems. That's going to be the challenge.

And you saw with the states they have now put in that over the next five years, they're guaranteeing not to remove any of those hubs, because that was one of the concerns by the states who were filing against this merger.

CAVUTO: But to your greater point here...


CAVUTO: ... there's still fewer players.


CAVUTO: And I always worry when there are fewer players, does that mean you have fewer options?

MURPHY: Yes, until one of the lower-cost carriers says, ooh, opportunity, because when ticket price goes up, someone is going to go in there. And one thing that hasn't been talked about is charters. Charters were big in the '70s and '80s. That's where a tour operator, somebody else would lease a plane and fly it down and back to, let's say, Cancun, on the leisure side.

So, that's starting to happen. We're starting to see more and more of that as schedule airfare goes up. These guys are taking the risk of the equipment, taking the risk with the seats and flying with their own pilots down to Cancun to deliver their vacationers or to Jamaica or wherever it happens to be.

So I think you are going to see people stepping in to fill that, especially on the leisure routes, where price sensitivity is pretty high. For us business guys, we're just stuck.

CAVUTO: Yes. Well, you're thin. You squeeze into those seats.


MURPHY: Well, I got -- I literally got stuck. That's why I couldn't get out and couldn't get fed. So...



CAVUTO: I'm the guy when he walks on the plane, excuse me, excuse me, excuse me, excuse me.

All right, thank you very much, Mark.

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