There is danger in the mergers of airlines for the traveler. Most experts agree that consolidation means a reduction in seats available on many routes, and that usually means higher fares.
However, the major airlines are struggling. Rising fuel costs, rising labor costs…competition keeping fares lower than the airlines want in order to make a profit or even break even…The passenger doesn’t care about that. They care about it from their perspective…they want the ticket to be cheap and they want all the amenities…food, blankets, pillows, in-flight entertainment…In most cases, we are willing to forego the frills to save money.
Flying can be fast. When you add in security, getting to and from the airport, and flight delays, it does slow it a bit. We have occasionally lamented the loss of the glory of travel. Recently, we heard one person lamenting about it…an individual who always wears a shirt and pants when traveling. In the past, flying was an event that invited the finest attire, as did many other venues. Now, this individual commented, the person next to you may not even wear shoes.
Glory days of travel aside, our point is this: Legacy airlines have long been conflicted about which direction to go in…cater to the lowest common denominator…low fares, cramped seats, no amenities…charging for every aspect of the service that one could live without…or they can go in the other direction…catering to the traveler who wants he amenities included and is willing to pay for them.
Airlines do this already. They have first, business, and coach classes, with varying price schemes and amenities. Some airlines have implemented classes like “Economy Plus” or “Enhanced Coach” for those who want something more than what their coach classes have become without the extreme price differential of a business class. For the majority of carriers, business passengers are their bread and butter. They buy late, they change plans often, and thus can be charged the most and produce larger profits.
But, what does this mean for mergers? The US Airways-America West merger took two airlines that overlapped almost nowhere and put them together. They shared a few airports in common, but only flew a few of the same routes. The integration has been full of problems…disputes with the integration of labor, reservations systems, facilities and resources…Personally we think they should get their house in order before trying it again.
When airlines have a significant level of overlap on a single route, it means a reduction in service and the raising of prices. When airlines have two hubs in close proximity, it means a realignment of service in that area. For example, US Airways operates a focus city in Pittsburgh, and Delta has its rapidly declining hub in Cincinnati. The two cities are likely to see overall declines as those services are consolidated.
Delta has already been shifting its service away from Cincinnati, causing an increase in fares there. This is what we fear…what we might have to look forward to…higher fares for less service. Regional airlines will suffer as well…they often fly services from the hubs of those they partner with…and with airlines pitting regionals against each other to cut their own costs…it means that their outlook could shift greatly with mergers.
And already other airlines, including ones who have been playing with mergers for a long while, are struggling to join the bandwagon. United topping the list, but bankrupt Northwest as well as Continental may be the next potential merger partners.
What does this mean? For now, we are hoping that if consolidation happens, it does so in a better manner than this. If not…perhaps a new age of bus and train travel is in all of our futures.