The Merger of American Airlines and US
Airways
February
13 2013 American Airlines and US Airways announced planning to merge a deal
that would create the world's largest airline. The big question is will this
merger beneficial the consumers. I believe that larger airline can provide
better services to their customers, but do the consumers care about the
benefits more than tickets prices because I believe in the future that merger
will decrease the competition between the airlines and raise ticket prices (New York,
2013).
I believe this merger will affect the consumer by reducing choice on many
routes is rarely advantageous from a passenger perspective. They argue that
reduced competition lead to less choice and higher prices, in my opinion
decreasing the competition between the airlines is not a great fact because
consumers have to face higher tickets prices and poor services. Once there’s no
competition the airlines will have the power to do whatever they want and the
consumer left without choice.
Another concern in this merger is the
pilots for both airlines, the list of seniority. Each company has different requirements to hire
their pilots, also; each airline has pilot seniority list. The list of
seniority is important because will agree who will fly this type of aircraft,
how much money will make. I believe the pilot seniority would be a huge problem
for the merger because each airline has two different rules for
pilot seniority and would get to messy when the merger happen (Jones, 2013).
The last step for merging between both
airlines is to get approved by the Justice Department’s antitrust division. The reason of the Justice Department’s
antitrust division is to let the American consumers have the right to expect
the benefits of free and open competition, the best goods and services at the
lowest prices. The Justice Department antitrust division is an important
part of the process because of their ability to stop companies from exploiting
the market (Department of Justice, 2005). The prediction of the major airlines
controlling 70% of domestic flight operations of the U.S. will affect me as
management because there will be a lot of works when both airlines combine
together, so I believe it will very hard to deal with the differences between
the airlines standards.
Jones, D. (2013). Pilot seniority a hot
issue at merging airlines. Retrieved from
http://fapa.aero/content.asp?ID=69&Gateway=Industry
New York
Times. (2013). American Airlines bulks up. Retrieved February 16,
2013, from, http://www.nytimes.com/2013/02/15/opinion/american-airlines-bulks-up.html
Halsey, A. (2013, February 13).
American airlines approves merger with us airways. Retrieved from http://articles.washingtonpost.com/2013-02-13/local/37077686_1_airline-consolidation-southwest-airlines-mit-international-center
Department of
Justice. (2005). Antitrust for airlines. Retrieved February
16, 2013, from, http://.www.justice.gov/atr/public/speeches/217987
Lovitt, R. (n.d.). What does A US
Airways-American airlines merger do for passengers. Retrieved from
http://www.nbcnews.com/travel/what-does-us-airways-american-airlines-merger-do-passengers-734087
The merger seems to provide more of a benefit to business travelers who prefer comfort over price. If this merger does increase ticket prices, it could have a negative effect on travel habits on the occasional flyer.
ReplyDeleteOne problem with the merger will be the amount of routes they will control. Like you stated, the new and improved airline will control around 70% of the domestic routes. This will make it difficult for most airlines trying to join the U.S. market. It will be a task for the new airline to find ways to generate the maximum amount of revenue while also keeping the consumers happy and not sky rocketing ticket prices.
ReplyDeleteI have to say you definitely took a different approach to the merger. Quite interesting but I disagree with the merger ultimately resulting in higher ticket prices and poorer service. If anything, ticket prices could increase, decrease or remain marginally similar. As far as the service, I believe the merger will rather offer improved services. Consumer comfort will improve especially since the new company intends to take delivery of 517 narrow-body aircraft and 90 wide-body international aircraft, according to the FAQ page of American Airlines Group Inc.
ReplyDeleteI agree with your opinion that the merger will reduce the choice to consumers and may also increase fair prices once things have been completed with the merger. I am not quite sure what would be a good prevention tool for the consumers who get the short straw in this merger. It is an unfair part of the market place. Maybe it will be for the better that the airlines merge but only time will tell.
ReplyDelete