Recently US Airways and American Airlines have announced an 11 billion dollar merger. We have seen mergers before, Delta and Northwest more recently. From mergers in the past we have a learned a little about what to expect from airline mergers, but the question posed now is what will this merger means for the consumer with narrowing down competition playing field from four major carriers to three.
Larger consolidated airlines pose some benefits to the consumer when it comes to looking at aspects such as airlines ability to provide better service as well as connections, but consumers such as business travelers are concerned with prices and bottom lines. Although airfares didn’t see any notable increases in airfare when delta and northwest merged (Perkins 2013), some business traveler analysts are skeptical that reduced competition and options will result in higher fares (US DOT 2013).
Another important concern in this merger specifically to flight attendants and pilots are seniority lists and how they will be merged. Seniority list are airlines ways of tracking progress with employees in which seat they hold or how long they have been with companies and pay grades. There currently is not an industry standard for seniority list mergers but it still remains a very serious matter to employees when it comes to mergers. In the past we have seen that each company involved in the merger will develop a committee of about 3 to 4 to hash out the seniority list usually with an arbitrator (Jones 2013). These committees can take months sometimes even years to hash out seniority lists. There is no standard to help guide through the process, which hasn’t help, smooth out the process. If industry standard were to be set some key rules I think would help smooth out the process would be a deadline, and representatives from both merging companies for a start. Although I am sure there are far more complications that go into setting up seniority list.
There is a merger guideline that companies must follow when applying for a merger of businesses. One specific step an airline must take in merging of airlines is the merger process is review by the Justice Department’s antitrust division. During this process the company is reviewed by the Department of Justice to see if the merger will result in a monopoly (Brandenburger 2012). The prediction of the major airlines controlling 70% of domestic flight operations of the U.S. will affect my career in the result that these airlines will be the bulk of the domestic industry. Most of the regulations in which I will be familiar with pertain to these airlines and more than likely in my future career I will end up working for or with these airlines.
United States Department of Transportation (2013) Annual U.S. Domestic Average Itenerary Fare in Current and Constant Dollars. Retrieved from: http://apps.bts.gov/programs/economics_and_finance/air_travel_price_index/html/annual.html
David J. (2012) Pilot Seniorty a Hot issue at Merging Airlines. Retrieved from: http://fapa.aero/content.asp?ID=69&Gateway=Industry
Perkins E. (2013) American-US Airways merger: Why worry? Retrieved from: http://www.smartertravel.com/blogs/today-in-travel/american-us-airways-merger-why-worry.html?id=14023955
Rachel Brandenburger (2012) Merger Enforcement in the Americas: Update for the U.S. from the Department of Justice. Retrieved from : www.justice.gov/atr/public/speeches/285173.pdf
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