American and US Airways to Merge

It’s finally official. After drawn out negotiations, American Airlines and US Airways have announced their intention to merge. The deal between the airlines requires federal approval, but based upon recent history, that shouldn’t be a problem. The new airline will take the American Airlines name and will become the largest airline in the world.

American Airlines and US Airways merger

What does this mean for me?

In the short-run, nothing. You will notice few—if any—changes to the airline schedules or service. During the approval process the two airlines will continue to be independently run. It should take 6-9 months before everything is approved and the merger becomes official, but even after that it likely will be 1-2 years before the two are fully combined. This is similar to what we saw with the United-Continental merger that took place in 2010 but wasn’t complete until 2012.

Eventually the US Airway brand will be phased out completely.

How will this affect air fares?

With one less airline in the competitive mix, it’s safe to say that this definitely won’t help. In the last seven years the U.S. airline industry has gone from six “network” airlines (the big ones that fly all over the world) to three as Northwest was folded into Delta, Continental became one with United, and now American joins US Airways. During that time, fares have been steadily increasing and the reduced number of airline choices has surely has a lot to do with it.

That being said, you can make a case that the damage from this consolidation wave is already done and one more merger isn’t going to dramatically change things. Hopefully, the 3 giant airlines left, along with all the smaller ones, will continue to compete fiercely with one another. Plus, there is always hope that this will create an opportunity for a new upstart to eventually emerge that could become the next JetBlue, Virgin America, or Spirit.

The most serious impact to fares is likely to be in markets where, together, American and US Airways have almost all of the traffic, which will leave just one airline after the merger. Dallas to Charlotte is a great example. Expect fares to rise in that market.

What happens if I am flying one of those airlines?

There’s no need to be anxious about booking flights on American Airlines or US Airways since flights will continue to operate as normal. These mergers tend to happen at a glacial pace. Flight schedules might be tinkered with once the two airlines combine but that won’t happen until 2014 and the airlines always give plenty of notice. When the end of US Airways is near, most customers will remain on the same flight they purchased originally, but simply on a renamed airline with a repainted plane.

What will happen to my frequent flyer miles?

No changes in the frequent flyer program have been announced at this time, but the merger will be mostly good news if you’re a member of American’s AAdvantage program or US Airways’ Dividend Miles – or both.  Eventually, the programs will merge and miles will be combined. On the merged airline, there will be more opportunities to earn miles and redeem them, since there will be a lot more flights to choose from.

One side effect, though, relates to alliances. American belongs to the oneworld alliance with British Air, Qantas, and Japan Airlines, among others, while US Airways is a member of the Star Alliance which includes United, Lufthansa, Air Canada, and Singapore. The new US-American Airlines will likely join the oneworld alliance, so if you’re currently a US Airways mileage member this will eventually impact the partner airlines which you can fly.

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