Published February 14, 2013
I've been reading some rather dire predictions about the fate of the U.S. airline industry as a result of the American/US Airways merger. Here are nine reasons why the merger actually might be good for consumers. Call it "silver lining" reasoning, but consider:
1. There will be real savings, which can be passed along to consumers (or at least put a brake on fare rises). Better use of fuel-efficient jets between the two fleets (AA can get rid of those gas guzzling MD-90s); back office savings (accounting, marketing, IT, management, sales, PR, etc).
2. Fares won't increase all that much, if at all. If airlines have learned one thing, it's that people stay home, drive or video-conference if fares go too high. Most air travel is discretionary, not "must do."
3. If fares on certain routes do go higher, that will make it more profitable for competitors to step in and lower fares once again. Yes, fares on "duopoly" nonstop routes (those where only US and AA fly nonstop, such as Dallas DFW-Charlotte, Philadelphia-Miami) may go higher at first, but that will open the door for VirginAmerica, JetBlue or another carrier to step in profitably. In fact, once the airline industry becomes consistently profitable, we may see another JetBlue enter the fray.
4. Service should improve. Bankrupted airlines lead to grouchy employees, dirty planes, and generally a bad experience. Maybe they'll bring back coloring books for the kiddies.
5. You've been paying for these bankruptcies through the backdoor anyway, all these years. Every time an airline files Chapter 11, it reneges on its pension plans, and the U.S. government takes over--that comes out of your taxes. And investors (banks, pension funds, etc.) who lose money on airline investments pass the losses on to you one way or another.
6. You'll still have at least four options to get from A to B on many routes, or as many as 9 on some routes (New York to LA for instance).
7. Foreign-based airlines are expanding service from the U.S.--Emirates, Turkish, Air Berlin, Qatar. That may help keep international fares moderate.
8. You'll have more ways to get where you're going if there's a delay or cancellation. Pre-merger, American wouldn't put you on a connecting flight through US Air's Charlotte hub if your flight via Dallas is canceled; but a combined AA/US will do just that. More flight combinations will be possible.
9. You'll have more miles to play with. If you have 10,000 in US and 15,000 in AA (not enough for a free trip), now you will have enough.
This may seem contrary to logic, and a bit Pollyanna-ish, but airline consolidation is a reality and it's not going to be as bad as some consumerists predict. In fact, it may be a win-win.