Airline mergers mean more pain for passengers
A planned marriage between American Airlines and US Airways would likely produce the same delays and complaints as the deals before it.
As CNN discovered, airline mergers don't typically work wonders for passenger satisfaction. The last time US Airways attempted such a big shift, when it combined reservation systems with America West in March 2007 after their merger, the Department of Transportation reported that passenger complaints about the airline nearly doubled.
United (UAL) took similar heat after its merger with Continental last March, when complaints about its service shot up 60%.
Delta (DAL) didn't fare much better after its merger with Northwest Airlines in 2009 and 2010, as complaints rose and on-time arrivals fell. In the case of recently bankrupted American and directionless US Airways, it may get a lot worse before it gets better.
American filed for bankruptcy protection in November 2011, and a bankruptcy court allowed it to throw out its pilots' existing labor deal back in early September. The airline saw its on-time arrival rate crater at 59% in September amid pilots' maintenance complaints and sickouts.
A labor dispute was responsible for a portion of those problems, but so were incidents in late September and early October in which passenger seats came loose on three flights and forced the airline to ground 47 planes for inspection. American's arrival rate has since recovered, but still lingers below 80%, according to FlightStats.com. Only JetBlue (JBLU) and Air Canada (AIDIF) passengers were late more often last month, with respective on-time arrival rates of 78.9% and 58.6%.
US Airways' on-time arrivals were far better at 83.3% -- trailing the 84.9% at Southwest (LUV), the 87.1% at Alaska (ALK) and Delta's 87.2% -- but the airline is already giving off the vibe that a merger with American would be awkward at best.
U.S. Airways made AMR an offer in November that put U.S. Airways CEO Doug Parker at the head of the new company, but would give AMR creditors 70% of its equity. AMR management not only seemed shaky about handing the controls to Parker, but also wanted a bigger cut than the 70% on the table.
That was after American chairman Tom Horton outright insulted U.S. Airways earlier last year by calling out their previous merger failures to the Dallas Morning News and stating publicly, "I’m not sure what’s in the water out there in Phoenix. Maybe it’s the cactus."
Should this merger happen in spite of all the above, passengers won't necessarily be doomed. Airfares have increased less than 2% a year since 2004 despite the spate of mergers, according to a study by PricewaterhouseCoopers. That's less than the increase for fuel and labor during the same span, but even that's not such a great deal if passengers are paying the same for less.
More on moneyNOW
Screw the Airlines!
I have no use for them whatsoever and I have everything I need right here at home.
I love to travel but not any more . All they are doing raising prices , no food and no comfort.
If the Justice Department let’s this one “fly” then we should close the Justice Dept and apply the savings to U.S. budget deficit reduction.
As for PriceWaterHouse, don’t forget Arthur Andersen/Enron, Deloitte/Autonomy and the 2008 Subprime collapse where everyone said “the books were good”, that should cover accounting credibility.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
The company tries to tamp down criticism from activists who argue that the mascot promotes childhood obesity.
- Oklahoma senators change tune on disaster relief
- At software giant SAP, autism is an asset
- Mike Bloomberg's next career: Taxi magnate?
- Shotgun wedding for Saks and Neiman Marcus?
- Charles Ramsey gets burgers for life, but no Big Macs
- New Jersey bar sting turns up 'swill'
- Mike's Hard Lemonade goes after male drinkers
- Big job gains expected next year, economists say
- Yum aims to fatten up by doubling Taco Bell sales
More Market News
In the never-ending contest for sales, American carmakers are pulling ahead.