Today, American and US Airways complete their merger. You would think that after such a long time, this would feel like the end of something huge, but it’s the opposite. This is the beginning of the real work that needs to be done — bringing the airlines together — and it’s not going to be easy. (Just ask United.)
The merger being completed means a lot of things. It means that Tom Horton and friends are now off counting their money while Doug Parker and his team get to dig in. It means silly lawsuits or federal challenges can no longer threaten to derail the merger. And it means that American is no longer a bankrupt company. But in the eyes of the traveler, that doesn’t mean a whole heck of a lot.
In fact, absolutely nothing has changed in the eyes of the traveler and won’t for the next month. The airlines have deliberately held off doing any kind of integration work publicly until after the holidays because they don’t want to mess anyone up during that time.
January 7 is the first day when things will start to change. I believe we’ll hear a lot more about future plans that day, but at the very least, we’ll see the ability to earn and burn miles across the two frequent flier programs. And elites will get reciprocal benefits. Codesharing will follow. Then we’ll see US Airways leave Star Alliance and join oneworld. Eventually, we’ll get to D-Day. That’s the dreaded day when they switch to a single reservations system. That day, when the “US” code disappears, is really the day that I consider to be the biggest milestone from a customer perspective. It’s like the capstone officially acknowledging that the structure has been built.
But I’m getting ahead of myself. Up until this point, my interest has centered around why the merger is a good idea. But now that it’s done, it’s time to shift to analyzing how well they handle the integration. I’ll reiterate (and rephrase) a few points I made back in February, the day the merger was announced, about how not to screw this up.
Be American With a Healthy Dose of US Airways
The management team comes from US Airways but they need to quickly get into the mindset that they are now running one of the great global airlines. I really don’t think this is an issue – there has been plenty of time to plan for this and President Scott Kirby is already talking the talk – but it can’t hurt to repeat it. At the same time, don’t lose a lot of the forward-thinking that made US Airways so successful.
Focus Marketing on the Employees
Every merger is a pain in the butt for all involved. For that reason, it’s not time to crow about anything externally. It’s time to put your nose down and make sure everything runs as well as possible (and not like the last few days in ice-laden Dallas/Ft Worth). There is nothing to brag about right now, because nothing has been done from a public perspective. On the flip side, employees need to know as much as possible. Mergers are really stressful, and there’s always uncertainty in the process. Management should focus all efforts on keeping employees engaged until an external campaign has some really positive news to talk about.
Get Rid of the Bad Parts of the Old American
Even though I said the US Airways management team needs to start thinking like American, it needs to think differently than previous management teams at the airline. There was a lot of bad preventing American from succeeding over the last decade, and that needs to disappear. A cultural change like that is hard, but it is crucial.
Finish Labor
This merger has a tremendous head start on others since labor is so incredibly supportive. Now the labor groups need to come to agreement on seniority and put this into place. There’s no doubt we’ll see labor strife down the road (this is an airline, after all), but hopefully that won’t disrupt the integration from happening in a timely manner. So far, the skirmishes we’ve seen haven’t been a threat.
Craft the Network
Of course there will be a focus on growing revenue, but a key piece of that is building a competitive network. That is undoubtedly going to mean cuts in some places, additions in others, and shifting of resources all around the network. We’ll see all the hubs remain in some form for at least a few years, but they will end up looking different after the network has been rebuilt.
Do Tech Right
I’ll end with one last note. We saw it with US Airways/America West and it’s been a bigger nightmare with United/Continental. Don’t rush the tech transition, especially the reservation system combination. Just make sure it’s done well. Take all the time you need. Just don’t mess it up.
Congratulation to what is now American Airlines Group and to Doug Parker, Scott Kirby, and the rest of the team for joining United and Delta as one the three surviving global US airlines. Now it’s time to get out the microscope and analyze every move. This is going to be fun.
47 comments on “The American/US Airways Merger is Finally Complete; Now It’s Time for the Hard Part”
“We plan to begin rolling out exciting new benefits in early January, such as the ability to earn and redeem miles on both carriers and reciprocal lounge access. On March 31, 2014, we plan to join the oneworld® alliance.”
http://www.usairways.com/en-US/aboutus/pressroom/newamerican.html?c=glmus_21132&re=1
As an AWA vet, it sure will be nice to see that USAirways name go away.
Can we have a TWA legacy plane? Please? Golden Globe version!
I’m intentionally going to jump the gun here. Now that AA, DL & UA are the three remaining airlines on the island as it were, what happens when one of them runs into finantial problems? You can only raise fees so much before customers bawk & say enough & trust me it will happen.
SEAN – Probably the same thing that happened before. If one of the three gets into trouble, they’ll file for bankruptcy and come out the other side. I can only imagine the government getting involved if there was some sort of insane external shock (like 9/11).
I wouldn’t say absolutely nothing changes for the traveller. At JFK USAirways already changed terminals pre-approval of the merger from 7 (BA, Cathay, United) to 8 (American). Too bad, I loved the irony of using the formerly glamorous Concorde gate 1 for a A321 to PHX.
This is probably a question for FlyerTalk, but I will pose it here… do we have any idea how long we can credit US Airways flights to Star Alliance FF programs?
This would probably be until US leaves Star for OneWorld on 3/31, unless the other carriers in Star pull codeshare or mileage benefits.
My Question is will the Cactus Call Sign Remain After HP/US it some how stayed around I sorta hope it does because Cactus is well unique Granted American Sounds more Professional and Easier for some to say so who knows about the call sign, but hey congrats to Both sides to finally get the Merger done
Jeremy – I’d love to see Cactus remain, but I bet it goes to boring old American.
If I remember correctly, “Cactus” was chosen to avoid confusion between “America West” and “American.” That conflict no longer exists.
But it was kept in a nod toward the history. I wouldn’t be surprised if we ended up with the callsign of Cactus and the IATA code of US. (American was in a competition with US Air for the IATA code of US when the military gave it up.)
I wouldn’t mind seeing Cactus become American’s call sign. It’s very distinctive. But long standing tradition will probably prevail and American will most likely be the call sign going forward. The IATA code may remain US. We’ll find out eventually (nothing like stating the obvious, huh?).
My comment involves tech I would like to see AA take a page from united and work on a mobile apps as good as theirs. United has done something’s that are questionable but there app is A+
sounds good but when do we get to play the which routes get chopped from DCA (and the other airports with divestitures of slots, gates or both)? that’s always my favorite post-merger game!
sean…I would be glad to see the days (like it was prior to deregulation) of an average 51% load factor on ALL flights….
At least now Southwest will only have to thank American instead of AA & US for destroying AirCal/PSA/RenoAir which allowed it to become big and take over intra California and the west.
i got an email from us airways and it says “We’ll exit Star Alliance on March 30, 2014 and, as of today, we’ll no longer offer codeshare flights for sale on United Airlines. ”
does that mean we can no longer redeem us airways miles for united/star alliance flights too regarding the “as of today” part.
thanks.
ang – Codesharing and mileage redemption are unrelated. I believe there was talk about them starting to block some airlines with redemptions but I don’t know the details.
So back in the day, when AWA started it rented space from AA in PHX terminal 3. Because it outgrew the space and totally consumed the south concourse of terminal 3, AA became testy that this annoying upstart was disrupting its baggage make up area. When they complained, HP said well tough we rented the space from you, deal with it … AA replied, yeah but we never thought you would actually make it! … I guess the shoe is on the other hand now…
I’m wondering – in Jan AA FF gets the ability to book FF flights with miles on US – but US does not leave Star until 3/31 – does that mean that in Jan you can use AA miles to book into Star Alliance flights? Asking because there is a trip to New Zealand I would love to be able to book on NZ Air rather than fly on Quantas to Australia and then to NZ……any idea??
I would think that AA will allow you to book on US and current AA codeshares/OneWorld members. You would have to use US Miles to book on AA or US Codeshares/Star members.
Lou – It all depends on when they link the two accounts and allow for mileage transfers. If they allow mileage to be transferred back and forth on Jan 7, then yeah, you could send your AA miles to your US account and redeem on Star carriers. But good luck finding good availability on Air NZ.
The America West logo on top of the big AA logo, enclosed by a gold border summarize the future of AA: America West dba American.
I am not a big fan of the term “completed their merger”. It’s the legal change in control that’s complete. Nothing really, other than the change of the names on the executive page (http://www.aa.com/i18n/amrcorp/corporateInformation/bios/main.jsp) has otherwise been completed. No operations are merged. No processes have been merged/standardized. I know that’s the gist of the actual blog post, so my comment is really just about the terminology used to describe what happened.
How do you determe what is a ‘frivoulous law suite’ ???
I think AA cancellation of its PROMISE to never let pre 1989 miles EXPIRE has violated its PROMISE to its Senior Flyers. SHAME on AA for its BK GREED, while purchasing MILLIONS in new aircraft….
Ulev – If you read the link that’s in the post, you’ll see what I’m talking about. Every judge who has touched that suit has had harsh words.
Business as usual. This is sad considering this is an American company. Hope they can get out of this mess soon.
I did read your link…that is a different case, I was a participant in a suite for those of US who were affected. The BK Judge dismissed it On The grounds That it was a ‘re suite’…of the original….???
No, it was a violation of a Court ordered resolution , which if changed would REQUIRE dissolution of the AA dvantage program… This ain’t over….
CF, could we get a rundown of the logos in the image above? I know some of them, but many of them I don’t know.
Starting from the top and going counter clockwise:
US Airways
Piedmont
Allegheny
Ozark
Trans Caribbean (I think)
Reno Air
Air Cal
Mohawk
Lake Central (Not sure on this one either)
PSA
America West
TWA
And it all comes together to AA!
Yep, Chris is right on all those.
Excellent. Thanks Chris and CF!
You’re welcome…now if only I could figure out a way to make a living from airline trivia!
Hey, there is this guy who started a blog by saying: “I’ve had many friends tell me that I should be blogging … I have a lot of seemingly useless knowledge about the airline industry that somehow comes in handy sometimes. I’m always getting emails and phone calls from friends asking for advice on buying tickets, getting to the airport, etc. Now I’ve decided to move these conversations to a public forum so others can benefit.” You might want to check out his first blog entry at http://inmff.net/g2y
Oops, clicked post too soon. You might want to ask him for advise on how to get started.. Or just read some of his blog entries.
Amidst all the fun speculation on how things will come to pass, I love the cluster of logos! My own bone to pick…why does everybody forget Empire?
Hrm, probably because it got dragged into US Air via Piedmont?
Dale – I created this one a long time ago, but I think I remember looking at Empire and then realizing it didn’t have a logo without text. (That’s why I used the old AirCal logo.) I thought it looked cool only having images except for the big AA. But this could be revisionist history and I just forgot. ;)
It’s already started: Delta raised prices $10 each way the day after the American/USAir merger closes.
And I’m sure that is just the beginning. Just watch the prices continue to rise just as they did after the other mergers we have see. But all you read is that this merger will not raise prices. It was obvious from the beginning that would happen.
I can understand from a business perspective why the mergers are happening. But when the airlines take advantage of this (DELTA) and raise there prices… that is just outrageous. It is so expensive to fly in the states right now as it is. Mergers don’t really help anyone but the companies.
Lina, I am afraid that with Doug Parker & Co. (US AIR) now in control of AA you can expect to see FF miles devalued soon (more miles to fly, shorter low seasons and loss of Gold/Plat benefits, etc.). Parker needs to quickly recover the money spent in obtaining AA, so you can expect fares to increase at every opportunity – or at least attempts to increase fares. Additionally I can believe that he will devise more methods (ala Ryan Air) to nickle & dime passengers.
Bottom line: In my opinion the headlock the 3 major airlines have on consumers will be painful and only get worse. Since necessity is the mother of invention, this could be an opportunity for new airlines to try and join Jet Blue or pickup the baton that SouthWest has dropped serving low cost routes. In other words, potentially abused consumers may be ready to support new competition should it appear in the future.
Americans and travelers in general hate monopolies. A new one has just been granted life by the courts. Agree with me or not, the airline monopolies may have created opportunities not seen in years, IF and When the airlines start to dictate unreasonable fares, fees, FF program changes, etc.(I don’t see them passing the temptation) it could drive dissatified and angry consumers into the arms of new airlines.
My above opinion, I believe, is a reasonable possibility of a backlash long in comimg from the abused public. The growing use of flying cattle cars is another issue.
WARNING – do not book an American Flight that is operated by US Airways. If you have Preferred Status on US Airways you will not be able to book premium seats and US AIrways cannot help you with any American reservations currently.
US Airways will now CHARGE YOU to use your frequent flyer miles to upgrade. That’s right-as of April 1, 2014, they are now going to make you pay $$ in order to get rewarded. I just tried to upgrade a domestic ticket on US Airways using some of my miles and was informed it would cost me $175, which as a percentage of my $500 round trip ticket, is quite a large number. So my question is this: The Dividend Miles program is supposed to reward their frequent fliers, yet they are now charging you in order to get their loyalty reward? That is total BS, and just shows that once the Justice Dept. caved in to the merger, it left us at the mercy of the airlines. This is the only airline that had a direct flight to my destination, so not wanting to take the milk run, I booked it. But the monopoly on most of the routes out of Phoenix allows them to strong-arm the consumer. I will make every effort in the future to find and use a different airline than US Airways (and potentially American due to the merger) as long as they continue to treat their passengers in such a shabby manner-especially their best passengers!
pvaz – You may not like co-pays but this has nothing to do with the merger. American and United also have co-pays required for upgrading. This is nothing new, and I would suggest that you should have reviewed the upgrade requirements before purchasing a ticket if that was going to be an issue.
FYI – There is no $175 upgrade charge that I can see. This is the full list:
http://www-mobile.usairways.com/en-US/dividendmiles/programdetails/upgrades/mileageupgrades.html
Your opinion, I disagree. I think it has everything to do with the merger. It went into effect April 1, 2014. Do you know when the merger was effective? Strange coincidence huh? And the $175 was what he tele agent quoted me, so telling me their is no $175 upgrade charge is a bit arrogant–so strike two for you. Do you work for US Air?
pvaz – Ok, so clearly you’re the kind of commenter who doesn’t want actual answers but just wants to be angry. That’s fine. But I’m going to try one more time and then I’ll give up.
US Airways has had co-pays on mileage upgrade awards since early 2012. This is not new.
On April 23 of this year, the airline stopped waiving those fees for elite members in the Dividend Miles program. Are you an elite member? If so, I’m going to guess you’re Silver. Elites still have access to free upgrades domestically closer to departure, but maybe that’s what has you so wound up.
While you may have heard a reservations agent tell you that the fee is $175, I would suggest clicking that link I just posted. I’ll put it here for you again.
http://www-mobile.usairways.com/en-US/dividendmiles/programdetails/upgrades/mileageupgrades.html
You will see there is no $175 copay if you’re doing a simple roundtrip nonstop flight. There is SOME co-pay for sure but I have no idea where you’re going so I can’t tell you exactly. More interesting to me is that you actually found availability to upgrade. US Airways is pretty stingy.
And to answer your last question, you are welcome to see my work history at crankyflier.com/about.
I’d bet that the $175 was $150 for the upgrade, $25 for the award processing fee:
http://www.usairways.com/en-US/dividendmiles/usemiles/booktravel.html
I always find it funny when someone says “your opinion” when presented with what should be an authoritative source.