Execs welcome American Airlines/US Airways merger, but advocates fear fare hikes
ATLANTA -- The merger of American Airlines and US Airways will create a new mega-carrier that will be a stronger national and international rival for Atlanta-based Delta Air Lines.
And Delta's OK with that.
"We think it's good for the industry," Delta president Ed Bastian said at a breakfast meeting last week as the American-US Airways deal took shape.
The deal is seen as concluding an era of consolidation that started with the Delta-Northwest merger of 2008 and has now shrunk the industry to four major players: United, American-US Airways, Delta and Southwest.
Industry executives say the realignment will calm the fierce competition in the industry that drove billions of dollars of losses in past years, due to excess capacity and fare wars.
Flier advocates, however, warn that fewer airlines competing against each other could mean higher fares and fees.
The deal comes as part of American's restructuring under Chapter 11 bankruptcy protection and US Airways' ambitions to grow and vault into the big leagues with airlines the size of Delta and United.
US Airways chief executive Doug Parker -- who tried but failed to engineer a merger with Delta during Delta's bankruptcy several years ago -- sees the deal as the last major airline merger among U.S. carriers.
"This is the last major piece needed to fully rationalize the industry, enabling airlines to not only be intentionally competitive but also sustainably profitable," Parker said.
More broadly, said FrequentFlier.com publisher Tim Winship, another airline merger could lead to across-the-board airfare increases that spill into Delta markets.
"We will indeed see higher fares as a result of further industry consolidation," Winship said. "Delta I have no doubt is licking its lips right now at the prospect of having one fewer competitor."
American, based in Dallas-Fort Worth, will be the surviving carrier in the merger with US Airways. Combined, the two airlines have a U.S. domestic market share of about 26 percent based on current flight schedules, according to Atlanta-based travel data firm Innovata LLC.
That compares with 19.6 percent for Delta; 19 percent for United, which bought Continental in 2010; and 18 percent for Southwest-AirTran. Southwest now owns AirTran and is gradually integrating its operations.
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