Where’s the Love? Cautionary Tales about Merging Airlines

3rd Jun 2014
Where’s the Love? Cautionary Tales about Merging Airlines

It’s always of interest when airlines announce major changes to their structure or systems that could potentially affect the flying public. So, since first hearing about the American Airlines merger with US Airways over a year ago, I’ve followed the news to see what sort of effects this change will have on my frequent flying experience as well as my pocketbook. Some of the first signs of changes were noted in a New York Times article posted on Valentine’s Day, 2013. I point this out because my reaction to it was, “Now where’s the love?” after reading it. The headline certainly caught my eye: Service Cuts May Follow Merger of Airlines. Uh-oh; we’re in trouble.

The article went on to describe that while the airline industry insists mergers are good for the flying public because they open up services to more destinations, economists and consumer advocates see big warning signs about the rising cost of many other airline services and fees for customers. In other words, it’s a shell game, moving around potential savings on the one hand and replacing them with higher fees elsewhere.

In fact, consolidation can actually lead to fewer consumer travel options. Fliers are now down to deciding between three major carriers: Delta, United, and the newly merged American Airlines. All of these airlines were formed from mergers that saw the elimination of formerly big names in the industry, including TWA, Continental and Northwest. Critics argue that passengers, especially occasional fliers, will discover that instead of having more choices, they have more limited ones as these three major airline players become nearly identical in regard to service provisions and charges. That trend is already in play if you look at how airlines in general operate these days. There aren’t too many distinctions between them, especially in regard to the fees they levy for services like which seat you choose, baggage, changes in airline tickets and early boarding privileges.

One has to also wonder if the theory about adding more routes as part of the American and US Airways merger is actually a benefit to consumers. For example, a shortage of regional pilots, due to new rules governing pilot credentials for flying regional routes and the low pay associated with flying them, has caused United Airlines to eliminate numerous non-stop flights. This has resulted in the removal of more than 39 stops along well-traveled routes, increasing fare prices and flight times for thousands of passengers, many of them business commuters who are now paying more money for tickets and scrambling to find the best flights to get them to their destinations in time. Consumers have pointed out that United made promises to keep existing hubs and even expand its services when it merged with Continental, so it’s understandable that customers are upset with the company’s decision to now eliminate established travel routes.

Other effects of a merger, like American with US Airways, will be to downgrade existing frequent flyer programs, including devaluation or elimination of some of the travel perks that passengers have enjoyed the most. While the frequent flyer programs for these two airlines won’t fully merge until 2015, current customers may already be seeing changes to existing policies. These changes are now affecting how miles are redeemed, which partner networks are available for air travel discounts and access to airline club programs.

A good example of this is referenced on MileCards.com about using US Airways’ popular companion tickets. This perk allows customers holding a Barclaycard MasterCard to purchase $99 ticket vouchers for up to two traveling companions on the same flight when buying a personal, round-trip airfare of $250 or more. With the merger completed, this program is going away. Current customers will have until the end of 2014 to use any vouchers that they have already received by the anniversary date of their card membership, and new customers in 2014 will receive a voucher as part of their enrollment kit. However, travelers need to be aware of a series of blackout dates for 2014-2015 that affect when these vouchers can be used. These dates are outlined in the MileCards.com post.

No frequent flyer likes changes to existing programs that affect ticket fares and services offered by their favorite airlines. The reality is, however, that airline mergers are common to the industry, and it’s likely that these changes can’t help but affect the quality and price of future air travel. That being said, positive outcomes are still possible. Airlines may try to stabilize airfares to increase customer satisfaction, bookings may become easier as fliers deal with fewer intermediary agents and smaller carriers may also benefit as they pick up routes that larger airlines drop, passing along savings and more travel options to consumers. Hey, I can find some love in that.


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