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.

By Jason Notte Feb 13, 2013 4:58PM
747 plane landed, Miami airport, Florida -Juan Silva, PhotographerThink the merger between American Airlines and US Airways (LCC) -- announced officially Thursday morning -- is going to improve customer service or arrival times at either airline? Your hopes should be about as high as either company's planes during a weather delay.


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

8Comments
Feb 13, 2013 7:50PM
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I use to love air travel but in the last 6-7 years I've come to dread it more and more each year.
Feb 13, 2013 8:33PM
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PricewaterhouseCoopers needs to share whatever it is that they are smoking with the rest of us!  Either that or they are delusional since the airfares on United since the merger have gone up in astronomical jumps.  Where they get this 2% nonsense is anybody's guess but probably based on information supplied by the airlines.  Perhaps they forgot to add a zero to the increase.  Instead of 2% they must surely have meant 20% at the very least!
Feb 13, 2013 6:45PM
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Screw the Airlines!

 

I have no use for them whatsoever and I have everything I need right here at home.

Feb 14, 2013 9:49AM
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I love to travel but not any more . All they are doing raising prices , no food and  no comfort.

Feb 14, 2013 12:26PM
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Doug Parker is on an ego trip. His only reason to keep merging/buying bigger airlines than the one he currently mismanages is to become the CEO of the worlds biggest airline. When a company gets too big to provide good service and good employee relations, it tends to implode.
Feb 14, 2013 1:27AM
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The travel mode of last resort. I used to fly regularly. Now I limit it to a couple of trips per year. I just stay home and live with out the prosperity and tax liability I used to generate by getting out there faster. 
Feb 14, 2013 2:55PM
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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.

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