Declining Expectations
Nov. 18, 2014
November marks the one year anniversary of the American Airlines and US Airways merger. 

Let's take a look back at all the assurances and promises about 'synergies', and see if the merger was indeed "fantastic for the traveling public," as gushed US Airways CEO, Doug Parker a year ago.

Promise No. 1: "Travelers will benefit from more competition once American and US Airways gates are given up at La Guardia, Logan and Reagan National airports."
False. Unless 'benefit' somhow refers to higher ticket prices and degraded service, there's been no passing of any savings along to the consumer. Quite the opposite according to historical airfare data. 

And, currently, American Airlines is tracking just behind Spirit Airlines in terms of passenger complaints.
Promise No. 2: 'Pledge' to retain hubs. 

True and false. No hubs have been closed yet. But capacity and routes at many have been cut, most severely at Phoenix, a former US Airways hub. Ticket prices have sharply increased across the board at that airport.

Also, this month American quietly closed it's regional jet operations at its Miami hub.

US Airways' hub, Charlotte, may see flight cuts to Europe, executives at American Airlines are hinting.
Promise No. 3: Frequent Flyers 'Synergies'

True: American and US Airways are combining their frequent flyer programs, with three main tiers: 25,000, 50,000, and 100,000 miles.  


False: Benefits passengers. Although the new American Airlines may have temporarily refrained from raising the requirements for their frequent flyer program, it is nearly impossible to get a free seat without booking months, even years in advance. And every other day day is either blacked out or there are only one or two free seats available.


Across the board, we've seen the airlines turn frequent flyer programs from something that used to be used for encouraging customer loyality, into a scam to persuade you to buy tickets, then find every possible way to deny you your reward.


Winners and losers:  


Ironclad Champions:


1. American Airlines Shareholders - With AAL stock on fire this year, up over 70%, and the most aggressive re-fleeting plan among U.S. airlines with almost 500 aircraft on order with crammed coach seating along with lower fuel prices, record profits are expected to soar.

2. American Airlines CEO Doug Parker - He took home about $20.9 million last year in executive compensation.


1. The Leisure Traveler: 

You might think that, given competition, there's no reason to worry about the effects of a mess like US Airways-American. Consumers can always switch to friendlier skies, right? But competition, while helpful, is an insufficient remedy for bad customer service. For one thing, on some routes, there is little alternative to the new American Airlines. More cunning is the fact that airlines' low standards have spread throughout the industry. 

When one airline increases change fees, they're quickly copied by many of its competitors. As airlines merge, competitors collude by taking turns raising fees or providing a lower level of service, making the bad treatment of consumers contagious. Yesterday's outrage soon becomes today's industry standard. Decent behavior is treated as a perk. 

2. Jobs, Price Competition, Convenience

To "merge" comes from the Latin mergere, meaning to "dip, plunge, immerse, drown, bury "sink below the waves and disappear".

What the US Airways-Amererican has merged are jobs, price competition, convenience, etc.


Stow Your Smile In The Overhead Bin


What have we lost? For those who can't remember, in 1978 any ticket was fully refundable. You could change flights without penalties. You were often compensated for canceled flights. 


Seats had more legroom. Travelers were treated to free meals and a much less harried flight crew.


If we take into account the remarkably degraded service, a reduction in price that is at best modest and more likely non-existent, and factor in the full costs to employees, customers and communities, any rational cost-benefit analysis must conclude that deregulation has been a failed experiment.


If fuel costs are lower, what's keeping air fares sky-high? 

Travel writer, Christopher Elliott, asks the question on everyone's mind in his Washington Post column: Why aren't airfares falling with the price of fuel?


The answer is similar to why Starbucks doesn't lower their prices when the price of coffee drops. Because these corporations will never pass along any savings to the customer, ever.


Also, little to no competition helps (the airlines) too. 


"The industry has become more concentrated, more oligopolistic, less competitive, and with greater market pricing power," says James Brock, an economics professor at Miami University.


"In a more competitive market, lower fuel costs would flow through to lower fares," he adds. "In a less competitive market? Not so much."


Read More: The Washington Post


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