An AMR (OTCBB: AAMRQ) merger with US Airways (NYSE: LCC) should be complete in time to for Americans to fly home for the year-end holidays–Christmas perhaps. With the launch of the new American Airlines Group, many experts believe that consumers can expect higher ticket prices, and that workers at the new company can expect fewer jobs. Whatever else the impact may be, a nation which once had ten major airlines, has only three, despite whatever protests Southwest Air (NYSE: LUV) may have.
Source: AMR
The question of whether fewer airlines is a better array will persist for some time. The industry has been plagued with Chapter 11 filings for years. Pan Am and TWA, to name two, have vanished. At least larger carriers with better balance sheets and likely more ticket pricing leverage may slow or eliminate bankruptcies. Lenders and airline manufacturers should be glad of that.
The new American Airways will argue that it has plenty of competition, particularly as it flies overseas. The mergers which created United Continental (NYSE: UAL) and Delta (NYSE: DAL) have helped each build huge routes around the world. The flag carriers of the largest nations, and the richest (read Singapore and The United Arab Emirates) seem to have unlimited funds to buy planes. What were once friendly skies are hyper competitive ones.
However, the U.S. portion of the industry is not one in which people travel thousands of miles to Paris and Shanghai. It is one in which people fly from Minneapolis to Salt Lake City. These fliers have already lost their free meals and free baggage. In some cases, the seats offered to them are barely wide enough for a tiny adult. And, there are many not-so-tiny-adults on domestic flights now.
The adventure and pleasure of air travel in America has disappeared almost completely. The more frenzied and cramped experience is here to stay. Does it matter than there is one fewer airline in the U.S.? Not for the airlines themselves, their shareholders, lenders, and suppliers. For the flier, it is a different matter. The AMR merger with US Air may not be wounds air travel, but for consumers it is likely to beat on that experience even more.
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