Airline merger can open doorsAdrian loveridge is a hotelier of four decades' standing;
By Adrian Loveridge | Tue, September 18, 2012 - 11:00 AM
WHILE FAR FROM being a done deal, our tourism planners must be already galvanized into exploring further opportunities that a merged American Airlines and US Airways could potentially present for Barbados.
Apart from the existing hubs of New York, Miami and to a lesser extent Charlotte, a combined carrier would have a considerable presence in Chicago (1), Los Angeles (6), Phoenix (23) and Philadelphia (43).
World ranking in terms of passengers handled is shown in brackets and collectively amount to over 202 million annually.
Having lost direct airlift out of Atlanta, Philadelphia and more recently, Dallas/Forth Worth, I would guess that there will be some reluctance to jump into another gateway.
But with proper planning, implementation and consistent marketing support, the temptation may prove too overwhelming due to the numbers and reach involved.
The merged AA/US airline would leapfrog the carrier into first position, both in terms of the domestic market and international enplaned passengers to/from the United States.
US Airways passengers would gain access to American Airlines international destinations and AA would be better able to connect to smaller American cities US Airways serves.
Between June 2011 and May 2012 American Airlines’ domestic share was 13.1 per cent and US Airways’, eight per cent. – Bureau Of Transportation Services.
This compares with Delta’s 16.2 per cent and Southwest’s 15.3 per cent.
Internationally to/from the United States, American carried nearly 21 million and US Airways almost seven million people last year. – Bureau Of Transportation Services.
Together they would create an airline about the same size as the world’s largest, United Continental Holdings.
And if terms can be agreed and permission gained from the regulatory authorities, it will also become the dominant United States carrier.
Should that concern us?
Surprisingly, according to Atmosphere Research Group, an independent advisory firm, the routes of US Airways and American have very little overlap.
Of the 508 nonstop city pairs (flights from one city to another without a stop) that American operated on a peak day in July (384 for US Airways), only 12 were identical with US Airways – that’s little more than two per cent overlap, or virtually insignificant.
Will a merger stifle competition or drive up ticket prices?
The jury is still out on this one, but while JetBlue and Southwest, who carried more than 161 million passengers last year, are still around, that’s probably unlikely.
Domestically, add Republic/Frontier, Spirit and Allegiant, and that’s another 60 million, so there is still lots of choice.
Prior to declaring Chapter 11 protected bankruptcy, American had placed the largest ever order for new aircraft in aviation history, dividing the supply between the two biggest manufacturers, Boeing and Airbus.
According to Airfleet.net, the current average of AA’s fleet (607) is 15 years old and US Airways’ (335) is 12.8 years. But nearly half of American’s entire fleet consists of 20-plus-year-old B767s and variants of kerosene-guzzling MD80/90s.
Successful implementation of debt and salary restructuring together with the introduction of a newer and more fuel-efficient fleet is therefore absolutely critical to the airline’s long-term survival and viability.
And this same criteria applies whether or not the merger becomes a reality.
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