The newly merged American Airlines will have a major presence at Charlotte Douglas International Airport, where US Airways operates about 90 percent of the airport’s daily flights.
Here are five things fliers need to know as the airlines combine their operations over the coming months.
1. Fares are likely to rise. But the catch is, they were likely to rise anyway. As J.P. Morgan analyst Jamie Baker said Thursday in a note to clients: “Fares are rising, but not because of a merger...You don’t need a merger to reach for improved revenue.”
As the airlines have gotten better about restraining their capacity and tried harder to avoid flying unprofitable routes over the past few years, they’ve already increased fares. That’s helped airlines stave off additional bankruptcies. Industry watchers expect fares to continue to increase for the foreseeable future, especially as jet fuel remains expensive.
US Airways CEO Doug Parker said Thursday that he thinks having a stronger third competitor to challenge United Continental and Delta Air Lines will actually keep fares in check, a view shared by some analysts. But the deal will leave the industry more consolidated and reduce the number of competing airlines.
At Charlotte Douglas, federal data show the average cost for a domestic round-trip ticket rose 1.8 percent in the third quarter of 2012 from the prior year, to $401. That’s down 20 percent from 2000, when the average round-trip domestic ticket from Charlotte cost $498. Charlotte has the 29th highest average ticket price out of the nation’s top 100 airports.
2. Frequent flier programs will be combined. “All miles in both programs will continue to be honored,” AMR Corp. chief executive Tom Horton said. In past mergers, combining loyalty programs has taken some time, typically a few months or more. And companies have been cautious about angering frequent fliers with big changes, since they are typically an airline’s most loyal customers.
When it’s all done, travelers will have access to the combined airline’s full route network to book tickets with their miles. But one thing the airlines haven’t decided on yet is which company will provide their combined loyalty program credit card.
3. Alliances will change. The combined airline will leave the Star Alliance, anchored by United, and stay with the oneworld alliance, anchored by American Airlines. Airline alliances allow travelers to easily book tickets with their main airline’s partner carriers and have become a major part of international travel. The oneworld alliance is significantly smaller than Star Alliance, or the other rival, Delta’s SkyTeam. It has thousands of fewer flights a day than the other two alliances.
And an alliance change at Charlotte Douglas means the airport could lose its Lufthansa service, since the German airline is a Star Alliance member. But the airport could one day see flights from oneworld members such as British Airways and Iberia.
4. Travelers on both airlines will have access to more destinations. US Airways travelers will have access on the new airline to 130 destinations served by American Airlines but not by US Airways. And American Airlines travelers will have access to 62 destinations that US Airways flies to but American does not.
5. Changes will take time. Until the merger closes, the airlines will officially be competitors. Parker and Horton said Thursday they expect to close the deal in the third quarter of this year, but regulators or American’s bankruptcy court judge could delay that.
Even after the companies officially merge, they’ll fly separately for months. US Airways’ last merger, in 2005 with America West, was announced in May and closed in September. The US Airways brand won’t go away until after the deal closes.
After that, the new, combined company will have to integrate its reservation systems and all the other complex technological systems that go with running an airline. Parker expects the company to use mostly American Airlines technology systems.
During the America West-US Airways merger, the company used the smaller America West’s systems, leading to myriad problems that Parker thinks could have been avoided. The airlines will continue selling tickets separately for much of the integration, and all existing tickets will be honored. Repainting planes inside and out will take longer. Some America West planes carried America West logos for years after the merger.
Parker said he hopes to get a certificate from the Federal Aviation Administration to operate as a single carrier in about 18 months. Until then, the company won’t be fully merged.
“Until the transaction is complete, American Airlines and US Airways will remain separate companies, and it will be business as usual for all of us,” Parker said in a letter to employees Thursday.