What's the Deal with the AA/US Airways Merger? - Charter Flight Group

What’s the Deal with the AA/US Airways Merger?

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What’s the Deal with the AA/US Airways Merger?

 

In seeking to prevent the merger between US Airways and American Airlines, is the government unintentionally leading them to their downfall? On the surface, it would seem not; as both US Airways and American Airlines are solid in their domestic routes.  The government says it is concerned with the airline’s ability to harm consumers by eventually creating higher domestic rates for travel. Could it be possible that they are not seeing the forest for the trees?

The Reality of the Merger

What the problem is and what the government isn’t looking at, is the international route market which makes up a substantial amount of an airline’s overall budget. For example, United Airlines’ international market makes up roughly half of its revenue. For American, it is closer to forty percent, and for US Airways, it is twenty-five percent.

While American Airlines and US Airways can function and possibly maintain in the domestic flight market, by being denied the opportunity to merge, the capital needed to upgrade and the ability to compete against other airlines in the international market will not be available. It will be increasingly difficult if not impossible to compete in the fierce world of international travel and both companies may have to pull out of that market completely. The repercussions for this decision are many:

First, this would cause a loss of options for business travel. Second, it could lead a loss of revenue that may not be easily replaceable. This in turn could lead to a down turn of not only one airline, but two airlines. By losing one or two airlines, the cost of travel could go up as well—because of crowding, congestion, delays from a lack of airliners, crew and personnel available to handle the overflow from the lost airliners.

Is this what the government wants? Seems kind of silly if you ask me for by preventing one problem now, are we creating multiple problems in the future.

The Bright Side of Merger Failure

Perhaps, but there is a bright side. If the merger does indeed fail and American and US Airways pull from the International market, travelers wanting to avoid the associated problems can always call Charter Flight Group. We’re ready when you are.

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