TWO BECOME ONE; AMERICAN AIRLINES AND US AIRWAYS TIE THE KNOT

Up in the clouds? Is the AA/USAir merger pie in the sky?

Up in the clouds? Is the AA/USAir merger pie in the sky?

So, after long months of ‘will they. won’t they’ musings and no shortage of subtle, subversive wooing, the merger of American Airlines and US Airways is finally a done deal. Some think it not so much a marriage as a shotgun wedding; both of these gargantuan airlines have filed for bankruptcy in the past. But what does it mean for commercial air travel and, principally, for the average passenger? Here’s my take on what I think will transpire.

I’m talking mainly in a transatlantic sense here, rather than a domestic one. Other, more knowledgeable experts on the airline industry have a far shrewder grasp of that scenario that I do. And my comments are, invariably, flavoured by my previous experiences of both these carriers as independent entities.

There’s bound to be consolidation on the transatlantic routes. At present, US Airways operates direct services from Manchester, Gatwick and Heathrow to American hubs in Philadelphia and Charlotte, North Carolina, with connections across the US and the rest of the world from there. It has traditionally flown A330’s on this route, operating in a two class- business and economy- configuration.

American Airlines, by contrast, has always majored out of Heathrow, with some subsidiary services from Gatwick and Manchester, It uses hubs in Raleigh, Dallas Fort Worth and New York’s JFK. In the main, it flies the Boeing 777 in three classes- first, business and economy- and sometimes older 767’s on the Manchester-New York route.

There is bound to be some culling of services here, and I’m guessing the casualties will be the AA services out of Manchester and Gatwick. That said, the airline will want to remain fully competitive with the new Delta/Virgin tie in that gives them access to the affiliated KLM/Air France network.

Of course, American Airlines is part of the Oneworld Alliance, a strategic tie in that sees the American giant locked into codeshare agreements with both British Airways and Iberia.  Word is that all US Airways passenger benefits, such as elite status and air miles, will be transferable to the new conglomerate. Let’s hope so.

What’s interesting here is the fact that BA in particular operates as a four class airline. Will the former US Airways fleet be upgraded with premium economy products, or even a first class? Not necessarily, because direct rival Virgin offers no dedicated first class, something that has always marked it apart from British Airways in particular.

In terms of style and service, I think there will be very little change in terms of what is on offer, with a uniform standard of product offer rolled out across both airlines. Pricewise, anyone expecting to see any benefits is probably deluding themselves. Consolidation will bring more advantages to shareholders than to potential travellers.

This in large part in the UK is down to the catastrophic level of APD (Air Passenger Duty), a series of prohibitive, government prescribed taxes that have rocketed skywards since around 2007. Transatlantic airline ticket prices are anything between forty and sixty per cent higher now than they were then. The shotgun marriage of the two airlines is intended to try and negate the worst effects of this, together with the rising cost- and potentially uncertain availability- of aviation fuel in the future.

This set of circumstances is not unique to the AA/USAir marriage of convenience, of course. All of the airlines are up against it, and consolidation is seemingly the only way forward. With the market volatile and uncertain, there seems little material prospect of an improving level of service- especially across the grey ranks of economy style cabin seating- any time soon.

No matter what shape and direction this lumbering new bird takes, it’s hard to escape the conclusion that both airline and passengers alike are stuck between a rock and a hard place, at least for the foreseeable future.

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