Well, it was bound to happen in this time of consolidation, or, more accurately, the “merge or die” aviation business climate, the seventh merger since 2005.
With the announcement of the marriage between American Airlines and US Airways, 80% of all flights will now be controlled by four major carriers: the new American, United, Delta and Southwest. How’s that for dwindling competition and the end of competitive fares.
Rising fuel costs and the driving need for efficiencies were most often cited as the impetus for the 11 billion dollar deal, plus American’s on-going bankruptcy struggles.
As Travel Daily News reports, the boards of AMR Corporation, parent of American Airlines Inc., and US Airways Group Inc., approved “the definitive merger agreement” creating a “premier global carrier.”
The company will operate under the much better-known American Airlines name, and plans 6,700 daily flights to 336 destinations to some 56 countries.
Tom Horton, Chairman, President and CEO of American Airlines assured stockholders, partners…and even customers, that the combined airline will “be in a better position to deliver.” Presumably, he means deliver service and value to customers, not just ROI to investors.
While commons sense and past experience indicate higher fares as a result of less competition, Rick Seaney, CEO of FareCompare L.P doesn’t think so. “I don’t believe that one bit,” he said, a view echoed by observers who actually believe the competition among the big four will lead to lower prices and better service.
Now where have we heard that before?