US agents fearful about American/US Airways merger
The merger of American Airlines and US AIrways will mean higher faces, capacity cuts and higher fees to cover the cost of ancillary services, according to US travel agents.
In response to the formal announcement of the merger yesterday, the influential trade lobbying group, Business Travel Coalition, said it was concerned about the $11 billion deal.
"From a consumer standpoint – individual traveller or corporate travel department – there are few benefits to offset the negative impacts of this proposed merger that include reduced competition, higher fares and fees and diminished service to small and mid-size communities," said BTC chairman Kevin Mitchell.
"To be clear, there is benefit in a financially viable air transportation system. However, previous mergers have already enabled seat capacity cuts, higher fares and billions of dollars in fees for ancillary services resulting in a financially strengthening industry. As such, consumer harms from this merger are indeed exacerbated, as there are no substantial countervailing consumer benefits."
Further detail about the proposed merger have been confirmed since the deal was formally announced.
As expected, the joint carrier will be called American Airlines and will be based in Texas, but will also maintain a "significant" corporate and operational presence in Phoenix.
American’s chairman and CEO Thomas Horton will serve as chairman of the combined airline’s Board of Directors and will continue as chairman of the oneworld Alliance.
US Airways chairman and CEO Doug Parker will become CEO of the new company and a member of the Board of Directors. He will become chairman of the Board following the conclusion of Horton’s service.
The Board will be comprised of two other American Airlines representatives, three other US Airways representatives, and five AMR creditor representatives.
The airlines said they expect to maintain all hubs currently served and that their regional carriers – AMR Corporation’s American Eagle and US Airways’ Piedmont and PSA – will continue to operate as distinct entities.
Longer term, the merged carriers want to expand their presence and further strengthen the network in the Western US, bolster American’s position in Latin America and the Caribbean and enhance connectivity within the oneworld Alliance.
This would include the joint businesses with British Airways and Iberia across the Atlantic and with Japan Airlines and Qantas across the Pacific.
Subject to approval by the US Bankruptcy Court for the Southern District of New York, competition authorities, and US Airways shareholders, the merger expected to be completed in the third quarter of this year.
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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