UPDATE: @Jamucsb (Who you should give a follow if you don't!) reports that he is currently on a US flight and the Flight Attendants indicated that the miles earned on that flight will be good on American Airlines once the merger is complete.
As the details of a merger between American Airlines and US Airways continue to emerge and the boards for the respective companies work out the exact timing to vote on the deal, which is still expected this week, there is much speculation about what the new airline will look like and what it means for travelers.
As I was reading my usual Google Reader set of articles I came across this article by Million Mile Secrets on how bad the merger would be for the frequent flyer. While I agree with some of the points that Daraius makes and do believe that this will be a great thing for airline investors I don't agree that it will necessarily mean worse service or a huge increase in airline prices because of reduced competition.
Over the past decade we have seen tons of airline consolidation and as a whole, yes we have seen airline prices go up. But a recent study found that from 2004 to 2011 when four mergers took place that airline prices increased, but not to the high levels that the airline industry officials feared. The fact that consumers, for the most part, still choose an airline based on what price is the cheapest means that airlines can't go full speed ahead with massive fare hikes, even with consolidation in effect. They still have to compete with each other and they still attack each other on a regular basis...we all see this every week when we price watch.
What makes me even more skeptical is the routes that AA and US currently fly. In a USA Today article from last week they quoted US Airways' Chairman and CEO Doug Parker in a speech from July pointing out that the route maps for AA and US are very different and they are not competing with each other that much. "Our networks are extremely complementary," said Parker, "There is very little overlap and thus no need to scale back the service that either airline currently offers."
So what a new AA/US merger means is easier access to each of the hubs for the others. The USA Today article points out that the top airports for American, Dallas/Ft. Worth, O'Hare, Miami, Los Angeles and LaGuardia are very different from the top airports for US Airways which are Charlotte, Phoenix, Philadelphia, Washington National and Boston Logan. There is no overlap here and it will make it easier for fliers to connect to more direct routes or routing that involves a more direct connection via a different hub.
I don't think that this merger is all doom and gloom for the frequent flyer. The elements for needed competition are still there and to be honest this is going to push the other airlines who ARE competing on these routes to undercut the new airline as they get their feet under them so I don't agree with the total premise that it will mean higher fares and studies back me up on this point. Now what the airline looks like on the loyalty perspective is a different thing all together but you have to think that AA did such a great job pulling elites from other airlines over and restoring faith of their elites after the bankrupsy that they don't want to go through that again and will work hard to make sure their elites feel they are a part of the process and bring US elites into the fold.
This whole story is developing as we speak, and it's going to be an interesting week. But I think it's a little speculative and early to completely throw the baby out with the bathwater when it comes to reduced services and drastic new high airline prices.
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