Saturday, February 16, 2013

So Now What? (American Airlines and US Airways Merger)

In case you've been under a rock this week, American Airlines and US Airways agreed to tie the knot on Valentine's Day. So what now?

Judging from their tails, this merger might have been a foregone conclusion

First things first, here are a few fast facts:
  1. The merged entity will retain the American Airlines name and will surpass United to become the largest airline in the world by most measures.
  2. Doug Parker, the current CEO of US Airways, will become CEO (Tom Horton, CEO of American, will remain on as non-executive chairman - and will also get a $20 million severance package at the end of  his term)
  3. They will be maintaining all 9 of the existing hubs (at least for the time being): Chicago, Dallas, Los Angeles, Miami, New York, Philadelphia, DC, Phoenix, and Charlotte.
  4. Operations for the two legacy airlines will remain independent until the merger is finalized, which will take some time.
  5. Once it is finalized, the new entity will be part of the oneworld Alliance (American is already a member, but US Airways is currently part of Star Alliance). This will mean a new set of partners for US Air flyers: Goodbye United, Lufthansa, Air Canada, SWISS, Thai, ANA, Singapore, and a slew of others... Hello BA, Qantas, Cathay Pacific, Air Berlin, and a bunch more.

I see both advantages and disadvantages to this shake-up. As United flyer based in NYC, I see more good than bad for me personally - but let's start with the bad.


The Bad

  • I'm going to miss having US Airways as a partner for earning status on United when traveling up and down the East Coast. Given their hubs in Philadelphia, DC, and Charlotte (not to mention a significant presence at LaGuardia), US Airways has a pretty extensive route map in this part of the country. I took more flights on US Airways than any other Star Alliance partner last year - they were mostly short trips, but still represented about 6% of my Premier-Qualifying miles.
  • Fewer airlines generally means less competition which generally means higher fares for travelers. I'm certainly not looking forward to that, though there are mixed opinions on whether this will really end up being the case


The Good

  • I'm looking forward to being able to combine balances across the two programs. I have about 370,000 total miles across them - and my wife has another 160,000. Any way you slice that, it's good for 3 first class tickets anywhere in the world, with plenty of room to spare.
  • To make matters even sweeter, mergers like this one tend to bring with them a period where miles can be freely swapped between the two programs. Depending on how the timing works out, that could mean having a healthy pool of miles with access to both Star Alliance AND onewold availability for a period of time!
  • While I'll miss having short-haul trips on US Airways as a way to help earn United status, I do look forward to having an expanded network on which to redeem Avios for short-haul domestic trips and trips to the Caribbean (where US Airways also has great coverage).
  • Mergers also present a great opportunity to get in on credit card bonuses before the cards eventually go away (see the 50,000 sign-up bonus for the Continental OnePass Plus card from a couple years ago). At the moment, there happens to be a 50,000 mile sign-up bonus for American (via Citi), and a 35,000 mile sign-up bonus for US Airways (via Barclays). These are better than the offers you'll see being widely-advertised. For more details, check out the first post in these threads on FlyerTalk: American Airlines Thread, US Airways Thread. I was just approved for both of these cards, which will mean 85,000 American / US Airways miles after meeting the (relatively modest) spend requirements. And 85,000 more thanks to my beautiful wife :)


Should be interesting to see how this plays out - there's still a lot to be sorted out, including the details of the loyalty program. For more information, check out http://www.aa.com/arriving.

What do you think about the merger? Are you looking forward to it, dreading it, or largely ambivalent?


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