A Rundown of Things to Come With The New Post-Merger American Airlines
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The American Airlines US Airways merger is expected to close this morning, which means we should start to hear definitive information soon about how the new airline will look, when their frequent flyer programs and accounts will begin to merge and what awards, fleets and routes will look like. So I wanted to give a brief rundown of what to expect, and how I think this will all unfold.
Frequent Flyer Programs
My guess is that we could actually start seeing the ability to shift miles between American AAdvantage and US Airways Dividend mileage accounts before the end of the year. While I do think that’s a bit of a long shot given how long it’s taken other mergers to get to this step, I do think it’s possible, though I think a likelier date is January 7, which COO Scott Kirby suggested would be the date that the airlines plan to take the first steps towards becoming a single airline.
In past mergers, mileage program integration began as early as five months after the merger announcement with reciprocal elite benefits and the ability to combine miles.
With Delta and Northwest, the merger was announced in April 2008, closed in October 2008, and by March 2009, flyers were able to combine their SkyMiles and WorldPerks accounts.
With Continental and United, the process took a lot longer. The two airlines announced their merger in May of 2010 and merger closed in October, about five months later. It wasn’t until May of 2011 that the two started combining some airport functions, and the new airline didn’t announce details of merging the two frequent flyer programs until September 2011.
I think we’ll see it happen a lot faster in the case of American and US Airways and I suspect we’ll be able to transfer miles back and forth between accounts throughout the spring.
My guess is that also because of the timing of the merger, the two airlines are going to allow flyers to combine their elite miles earned from this year on both airlines to put toward elite status in 2014 just to keep people happy and the merger on track without too many strident consumer complaints.
The two should also let flyers combine their Million Miler accounts from both airlines and that any Million Milers who already have status should retain their status without incident.
A merger also means the almost-certain disappearance of US Airways’ famous award chart “sweet spots” that include flying to North Asia (including Hong Kong and Taiwan) in business class for just 90,000 miles, or the South Pacific (including Australia and New Zealand) or South Africa for just 110,000 miles. Instead, flyers will likely be stuck at American’s higher levels of 100-110,000 to Asia, 125,000 miles to the South Pacific and a huge 150,000 miles to Africa (and chances are you’d have to transit through London and pay huge taxes and fuel surcharges on top of it!) – that is, if the airline doesn’t jump on the devaluation train after the merger and hike up its award pricing as Delta and United have done recently.
The absolute end date should be March 1, when US Airways is slated to exit Star Alliance completely by March 1, 2014. But several readers as well as FlyerTalkers have reported having trouble booking Star Alliance awards they’ve found on other sites like United.com and ANA when calling US Airways, so I expect award availability to start dwindling dramatically and then to disappear altogether by March 1.
The reality is, though the merger will go through, the two airlines are going to operate pretty much separately for a while to come, and it’s going to be a while before we see even the first steps towards integration.
This merger will be a bit different from past ones because Delta and Northwest, and Continental and United were already in the same alliances before their mergers.
For that reason, I don’t think we’ll see the integration of reciprocal upgrades or alliance elite benefit nearly as soon as we did in those mergers since it’s bound to be a messier process, but I could be wrong. The two airlines themselves could begin offering reciprocal elite benefits a lot sooner, though.
Then in terms of physical aspects – they’ll probably start painting all the planes in the new American livery, but that’s bound to take a couple years, so I think we’ll see a mix-and-match fleet for a while yet.
One other major sticking point I see is in-flight service, where there are huge discrepancies between the airlines. US Airways is notorious for being stingy with food and beverage service and being behind the times on things like installing in-flight WiFi on its aging fleet, while American has been making a major (and mostly successful) push to update its fleet and its service culture.
That’s bound to end because the man behind many of these changes, Virasb Vahidi, the Chief Commercial Officer, is being let go and replaced with his counterpart from US Airways, which says to me that American’s service culture and recent improvements are going to be superseded by the inferior values and service of US Airways. Even though officials from the airlines have said the merger will enhance both airlines’ services, I find that hard to believe with the new airline sticking with US Airways’ CEO and head of product, and I think we’ll see them resorting to US Airways’ cost-cutting measures.
That will even translate to things like beverage and meal policies. Right now, American Airlines offers meals in first class on flights over 2 hours that operate within traditional breakfast, lunch and dinner times. On flights greater than 2.5 hours that fall outside of a traditional meal time, a snack service will be provided. However, on US Airways, your flight must be over 3.5 hours to get a meal in first class, otherwise it’s just a basic or enhanced snack basket depending on flight time.
Hopefully we’ll see WiFi access on almost all domestic flights. Right now, American Airlines’ WiFi in the Sky domestic service offers Gogo-powered connections on all 767-200 and 737 aircraft as well as most MD80 and 757 aircraft. The airline announced plans to enhance its fleet with new narrow-body A319, A321 and 737-800 aircraft outfitted with inflight WiFi in early 2012, and it pledges to continue expanding the service to its existing narrow-body aircraft in the future. The airline has also installed it on its new 777-300ER’s, which fly internationally on routes like LAX-LHR and JFK-GRU.
US Airways has also upped its WiFi availability lately. The airline offers Gogo on nearly 90% of their flights traveling over the continental United States including on all Airbus A321, A320 and A319 aircraft and Embraer 190, 170 and 175 aircraft.
Speaking of which, the two airlines will have to standardize their seating products over next couple of years as well, but will probably be a long time, and before that comes to fruition, we’ll already see them beginning to mingle different aircraft on different routes. Mainline service on some routes downgraded to older planes, or vice versa. I don’t think we’ll see any downgrades on those lucrative transcontinental routes – I think the real losers will be expensive regional flights where there’s not much competition and where the new airline can shift clunkers from both fleets without too many repercussions on its bottom line.
Internationally, I’d love to see the new airline adopt either US Airways’ Envoy Suite or the new American business class seat from the 777-300ER on all flights, but that’s also likely way down the road once the two fleets start integrating in a major way.
Speaking of routes, the airlines only overlap on 12 routes, and 130 cities served by American but not US Airways and 62 cities served by US Airways but not American would be available to flyers of both once the merger goes through.
However, under the terms of the settlement, the airlines will divest 52 slot pairs at Washington Reagan National Airport (DCA) and 17 slot pairs at New York LaGuardia Airport (LGA), as well as certain gates and related facilities to support service at those airports. Each slot pair entitles the holder to one departure and arrival.
The airlines also will divest two gates and related support facilities at each of Boston Logan International Airport, Chicago O’Hare International Airport, Dallas Love Field, Los Angeles International Airport, and Miami International Airport.
After completion of the required divestitures, the combined company expects to operate 44 fewer daily departures at DCA and 12 fewer daily departures at LGA than the approximately 290 daily DCA departures and 175 daily LGA departures that American and US Airways operate today. Each is a departure and arrival.
So flyers out of LaGuardia and DCA will likely be affected most while those in other hubs will likely continue flying the same product they’ve been in so far.
The new American has agreed to maintain its hubs in Charlotte, New York (Kennedy), Dallas, Los Angeles, Miami, Chicago (O’Hare), Philadelphia, and Phoenix consistent with historical operations for a period of three years. After that, however, I think we could see some big shifts.
For instance, is Phoenix really going to be a hub with Dallas and LA buffering it in either direction? For that matter, will Philadelphia continue to operate as it does currently with Charlotte being such a profitable hub and American operating much of its fleet out of Chicago, New York and Miami? Only time will tell.
The Big Picture
Although the merger is going to go through any minute now, the most major, imminent changes we’ll see for the time being have to do with the frequent flyer programs and their award charts. I would strongly suggest any of you with US Airways miles who have been waiting to book Star Alliance awards do so as soon as possible while US Airways’ current award chart is still in place and awards are still available. You might have a small window of opportunity if you want to shift American miles to US Airways to book Star Alliance awards if the airlines permit that before US Airways’ exit from the alliance, but I wouldn’t bank on it.
Beyond that, I think we’ll start to see more major integration of the two airlines mid to late next year and only time will tell if it goes more smoothly than the mergers of Delta/Northwest and Continental/United, both of which involved some major culture clashes between the airlines and a lot of customer service headaches for flyers.
I don’t think it’s all bad news, especially for elite flyers who will start getting benefits on both airlines before too long, as well as the general flying public who will be able to earn and redeem miles on both airlines by early spring, but as with any major merger like this, I predict there will be a lot of hiccups and new information leaking out, so stay tuned for further developments.