Today the Justice Department announced that it is abandoning its effort to stop American Airlines and US Airways from merging, giving the airlines the green light to combine to form what will be world’s largest airline. As part of the settlement, the airlines agreed to give up landing slots and departure gates at several airports across the country in order to allow more access for smaller competitors.
What this means for you:
The merger is expected to close sometime in December, although it will take a while for the airlines to actually integrate their operations. For about a year, it will probably be business as usual with both airlines operating separately, even though they will be owned by the same company.
Eventually, the US Airways name will go away, their planes will be repainted with the American livery, and their frequent flyer programs will be merged. If you have US Airways miles, those miles will be transferred to American’s AAdvantage program.
Right now, the airlines are in different alliances. American is part of the OneWorld alliance with partners that include British Airways; US Airways is part of the Star Alliance with partners United and Air Canada, among others. The new American will be a OneWorld airline, so if you have miles on US Airways, the partner airlines you can redeem those miles on will change.
The big question for flyers is what will this merger do for air fares? Indeed, that was the Department of Justice’s concern when they initially tried to block the merger. Over the last five years, we have seen a number of mergers: Delta and Northwest; United and Continental; Southwest and AirTran (the latter two are still in the integration phase). This merger will mean one less “big airline” in the mix to provide healthy competition (and better fares!) for travelers. Without a doubt, we have seen air fares increase as the previous mergers have played out.
But—let’s stay hopeful. It’s very promising that economy carriers will have more space at key airports across the country and we’re hopeful that will help to inspire continued competition. A case can be made that the elimination of a lot of “legacy” carriers creates new opportunities for low cost carriers like Spirit, Virgin America, Frontier, and Sun Country to grow and bring their low fares to more cities.
If you travel these airlines frequently or have an upcoming flight, don’t worry—you likely won’t notice any changes. But for more information, read on.