New American Is Next Chapter In Industry Consolidation
By Jens Flottau, Christine Grimaldi
Source: Aviation Week & Space Technology
Whether the tie-up represents sound policy is another matter. Consumer advocates worry about higher fares, but some economists say that airline stability—noticeably lacking over much of the U.S. industry's history—will prove to be the greater good. The financial community welcomes this merger and industry consolidation as a whole, though passengers are left with fewer choices. But all the previous mergers did not lead to raising fares: U.S. travelers are paying less for tickets than in 2000. And Parker asserts that having three strong network carriers will give many U.S. fliers more options, not fewer.
Government regulatory authorities could still ask the merged carrier for certain concessions, if they determine that its combined marketshare would be too large. It might be required to divest some takeoff and landing rights at certain slot-controlled airports, such as Washington's National, where the merged carrier would dominate.
Other changes await on the regional front. Three wholly owned regional carriers—AMR Corp.'s American Eagle Airlines and US Airways' Piedmont Airlines and PSA Airlines—will continue to operate as distinct entities. American Eagle eventually will be the brand for those.
The US Airways-American combination may not look so significant from a global perspective, but there are some important ramifications to keep in mind. There will now be three big airline blocks in each of three major air transport markets: China (Air China, China Southern Airlines and China Eastern Airlines), Europe (Lufthansa, Air France-KLM and International Airlines Group) and the U.S. (American, United and Delta).
The merger will lead to one major change in the alliance world, with the Star Alliance losing U.S. partners, as the combined carrier will stay in American's Oneworld.
With Joseph C. Anselmo in Washington.
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