American, US Airways talk merger; more competition for Delta?

042612usairways2There was Southwest Airlines’ buyout of AirTran, Delta Air Lines’ deal with Northwest and United’s with Continental. Now it looks like American Airlines and US Airways are hoping to taxi down the tarmac.

American and US Airways said Friday they are in fact-finding talks that could lead to a deal. “It does not mean we are merging — it simply means we have agreed to work together to discuss and analyze a potential merger,” US Airways CEO Doug Parker told employees in a letter.

Analysts say the combination would allow the airlines to give Atlanta-based Delta and United Airlines more competition, since it would create a third mega carrier.

“You would have the international operations of AMR and the lower cost structure of US Airways,” Morningstar analyst Basili Alukos told Reuters.

Delta, the largest carrier serving Hartsfield-Jackson International Airport, already is getting more competition from Southwest, which began merging operations this year with AirTran, the second-largest carrier serving Hartsfield-Jackson.

A combined US Airways-American would have a considerable presence in New York, Philadelphia, Washington, Charlotte, N.C., Miami, Chicago, Dallas, Phoenix and Los Angeles, according to The Associated Press.

AMR Corp., the parent of American, has been in Chapter 11 bankruptcy protection since last November, and US Airways has had its eye on a deal for some time.

Further consolidation of the airline industry could mean even higher airfares based on a trend noted by the Bureau of Transportation Statistics, according to the AP. The BTS said the price of a domestic round-trip flight has climbed nearly 20 percent over the last 10 years after adjustments for inflation. Rising fuel prices are part of the reason. The industry also has piled on baggage and other fees to help its bottom line.

Is more consolidation of the airline industry a good thing, or more trouble for travelers?

8 comments Add your comment

Jonathan

August 31st, 2012
1:19 pm

Southwest Airlines did not merge with Air Tran. They bought Air Tran.

Terry

August 31st, 2012
1:43 pm

It could help to stabilize the industry which has been hit hard by the economy and fuel prices.

American, US Airways talk merger

August 31st, 2012
1:46 pm

[...] more at Atlanta Journal Constitution (blog). Share this news: Filed Under: Airline [...]

Horsetoothedjackass

August 31st, 2012
2:29 pm

@Jonathan While AirTran and Southwest are two separate operations at this time, Southwest is in the process of integrating AirTran into the airline, which is being done at a much slower pace in comparison to the DL/NW and UA/CO mergers. In the eyes of the FAA, Southwest and AirTran are one airline, as both airlines are now operating on Southwest’s operating certificate.

Aviation consultant

August 31st, 2012
2:29 pm

Consolidation is neither good nor bad, it is inevitable. AMR and US Airways simply cannot survive independently, they cannot complete with the larger players and don’t have a cost model than can survive on low cost revenues. They have to link up to create a cost model that will enable both to survive, although it will be a streamlined version for both. Both Phoenix and Dallas won’t remain as hubs, one will grow the other reduced to a support station, My guess, AMR survives and PHX gets reduced.

Prootwadl

September 1st, 2012
3:24 am

Mergers result in fewer carriers, which in turn means a larger presence and more control for each one in the US market. I think it harms consumers. Fewer choices and fewer hubs mean fewer direct routes, and like most industries, I think we’ll see that this form of consolidation will lead to the dominant companies raising prices.

zeke

September 1st, 2012
10:39 am

Delta should throw in a bid for AMR! This combination would, should, be of major benefit to consumers!

BR

September 2nd, 2012
10:51 pm

This merger needs to be blocked, like the AT&T-T-Mobile merger. It will only mean more costs, and more headaches for the consumer.