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US Airways, American merge Monday: What you need to know

Doug Parker
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Doug Parker

After years of wrangling and a legal challenge that nearly sank the whole deal, US Airways and American Airlines will close their $17.7 billion merger Monday, creating the world’s largest airline.

So what does it mean for the average traveler? Not a whole lot on Monday: The airlines say it’s business as usual. But changes to the airlines’ operations will start next year and will soon accelerate as US Airways and American work to combine their business.

Charlotte Douglas International Airport will be the combined airline’s second-busiest hub, behind only Dallas/ Fort Worth in the airline’s number of daily flights. The new carrier will be called American Airlines and will be headquartered in Fort Worth.

Everything from frequent flyer programs to employee unions, from paint schemes to reservations systems, must be combined. Here’s what you need to know for Day 1 of the new American Airlines.

If you’re expecting the paint on the planes’ tails at Charlotte Douglas to be a sea of American red, white and blue next time you fly, think again: Combining the airlines will take years. Changes visible to customers won’t happen until early next year.

US Airways and American Airlines will begin combining their frequent flier plans as early as the first week in January. Flyers will be keep all of their miles, and will be able to combine their miles from both airlines. Soon, the airlines will start offering reciprocal access to each other’s airport lounges.

The airlines will operate separately for a year and a half to two years, US Airways spokeswoman Michelle Mohr said.

“It will be some time before we start consolidating ticket counters and gates at our airports, and you won’t see US Airways planes immediately painted in American colors,” said Mohr.

US Airways is also leaving the Star Alliance in the first quarter next year and joining the American-led Oneworld alliance. That means the set of partner airlines US Airways travelers can use will change. Gone will be the transfers to Star Alliance partners such as United Airlines, Lufthansa and Air Canada. Instead they can transfer to Oneworld carriers such as British Airways, Iberia and Japan Airlines.

The airlines are setting up websites to help travelers keep track of changes. www.USAirways.com/arriving is active.

CLT remains a hub, for now

As part of the settlement US Airways and American reached with the U.S. Justice Department to get approval for the merger, they agreed to maintain service at their hubs for three years at current levels.

At Charlotte Douglas, the combined airline will operate about 650 flights a day – more than 90 percent of the airport’s total. That makes Charlotte Douglas one of the most concentrated hub airports in the country, uniquely tied to the fortunes of one airline.

US Airways CEO Doug Parker, who will lead the combined airline, has called Charlotte Douglas one of the best hub airports due to its low cost for the airline.

“I think this is great for Charlotte,” Parker said when the merger settlement was announced. “The Charlotte hub is going to be an important part of a bigger airline now.”

Of course, there are cautionary tales from other airports showing what can happen to hubs when their main airline cuts service. Pittsburgh is one of the starkest examples, and the one most often cited by aviation analysts: The city lost hundreds of daily US Airways flights, and much of the airport was left unused after US Airways dropped the city as a hub during the last decade.

New lease to be negotiated

US Airways’ current 30-year master lease with Charlotte Douglas runs through 2016. The airport and airline will negotiate a new lease in the coming years, which is likely to set the stage for the airport’s growth for years to come.

The current long-term lease, which also applies to most of the other airlines operating at Charlotte Douglas, splits the airport’s profits from nonaviation revenues with US Airways. That means US Airways gets a cut of the airport’s money from sources such as parking and concession sales, helping to offset the airline’s expenses for operating at Charlotte Douglas.

The combined airline will probably be negotiating from a position of strength, as it will control more than 90 percent of the airport’s daily flights.

Before he was removed from his job as aviation director in July, Jerry Orr said he was in preliminary talks with US Airways about the lease.

Airline and airport officials have since been tightlipped about the state of negotiations.

International routes are hot

As part of the merged airline, Charlotte will suddenly be a hub in a much bigger global network. The airline will have more than 6,700 daily flights to 56 countries. American has a stronger Latin American and Asian route network, and some local business leaders hope Charlotte gets a piece of the action.

Charlotte Chamber President Bob Morgan has said he hopes Charlotte gets its first nonstop flight to Asia.

Analysts have said that might not be out of the question. Oneworld alliance partner Japan Airlines has used its new Boeing 787 Dreamliners to open new service between Tokyo and cities such as Helsinki and Boston.

Qatar Airways, a Oneworld alliance member, announced last week that it will soon start nonstop service between Doha and American/US Airways hubs Philadelphia, Dallas/Fort Worth and Miami, offering a glimpse of the expanded international routes to which Charlotte hopes to gain access.

Executives at the merged airline will have to adjust the route network, and Charlotte will compete with other major hubs such as Philadelphia and Miami for the new international route.

Big changes for employees

The combined company will have more than 100,000 employees, including 7,500 based in Charlotte. Many supported the merger push because they’re in line for higher wages and more stable careers after a decade of cutbacks, bankruptcies and combinations of major airlines.

US Airways pilots, of whom 1,500 are based in Charlotte, are in line to receive pay raises of 25 to 40 percent, for example.

But some labor uncertainty is also likely as the companies work to merge their employee unions. Flight attendants at US Airways and American are feuding over whose union will represent the combined work group, for example. US Airways has 2,200 flight attendants based in Charlotte.

The union representing US Airways pilots is holding a recall vote in an attempt to oust its president and vice president, though a spokesman declined to say what the dispute is about. And the International Association of Machinists and Aerospace Workers is lobbying members of Congress to pressure US Airways to speed contract negotiations in advance of combining with their counterparts at American.

“Until the carrier negotiates new contracts for its own IAM-represented employees, the new American Airlines will not get off the ground,” said IAM District 141 President Rich Delaney earlier this month.

Portillo: 704-358-5041; Twitter: @ESPortillo
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