PG: Terry, tell me how this is going to be great for consumers.
TM: Is it good for the customer of US Airways or American to have more places to go from their home airport? It is. Is it good for them to pay more for that? It’s not. So, we’ll see how it plays out.
American and US Airways say they only compete on 12 routes non-stop, but what about indirect competition? Last year, a non-stop fare on American from Dallas to New York was over $1,000, but it was half the price to fly US Airways through Charlotte. So even though American and US Airways are not competing on the New York/DSW route that competition was causing US Airways to give me a better price than American Airlines would. One would presume that you won’t see that difference after the merger.
PG: You may be right. There are four major airlines in this country right now–American, United, Delta and Southwest–each of them basically controlling their own turf, their own roots and their own prices.
TM: When there are fewer competitors on any particular route–whether it be non stop or one stop–then you’re going to pay through the nose. Despite what American/US Airways say, they’re going to be a certain number of routes like DSW where US Airways will compete on price which are going to go away.
PG: I’ll make one prediction: in the new merger Phoenix is going to be a hub that gets reduced because there’s not enough originating traffic. It’s almost an artificial hub leftover as the headquarters of America West and now US Air.
TM: My first thought was that Phoenix would be reduced. I’m less sure of that. The question then becomes what American now calls Los Angeles hub, will that get reduced? They made it a hub for one reason, there’s a lot of people there, but that’s where they have to connect to their alliance partner at One World Airlines.
PG: Exactly, and they don’t want to give that one up. Let’s keep up our friendly bet on the disappearing hubs and see how it all plays out.
For more information on American Airlines merger:
- Read our new report: What the American Airlines US Airways Merger Means for You
- Find out the industry’s reaction when American Airlines filed for bankruptcy
- See Peter’s CBS segment on the proposed American Airlines-US Airways merger
- Check out the behind-the-scenes report of American’s rebranding efforts
By Peter Greenberg for Peter Greenberg Worldwide
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