As a lot of you know, American Airlines is merging with US Airways. Actually, it’s the latter that is more or less incorporating the former. More on that in a minute. Matthew Yglesias says that this means the end of cheap airfare:
But now the party’s over. A key stated goal of this merger—as in the Delta/Northwest and United/Continental deals—is to reduce “excess capacity” in domestic passenger aviation. That’s a polite way of saying less competition and less service. This will take a few forms. There are currently a half dozen US Airways flights from its hub in Philadelphia to Dallas. Dallas is a key American hub, so American also flies six times a day from Philadelphia to Dallas. The combined entity probably won’t need 12 flights a day to serve the route and definitely will have more power to raise prices than either airline would separately. Smaller cities will also see the pinch. Right now, US Airways and American both serve Tallahassee, the former seeking to route passengers through its Charlotte hubs and the latter through its Dallas and Miami hubs. A merged airline might cut that Charlotte service, figuring that network access through Dallas and Miami is ample to compete with Delta’s service through Atlanta. By the same token, when airlines merge the smallest hubs in the new larger airline tend to lose out and shrink.
It’s been a good ride, but I am inclined to agree that it wasn’t going to last. My hope is that they basically find a way to insert price discrimination where possible. There’s a solid argument that they will. They can charge for carry-ons, for instance, and keep working towards variable seating arrangements so that those who are inclined and have money can spend it on more legroom while those who are hard-up don’t have to.
I am, I should say, less enthusiastic about plans to upcharge for window and aisle seats, primarily because for families it means spending extra money to sit together and that doesn’t sit right. I also have serious issues with cancellation fees because that’s not a variable expense so much as punishing someone for having a change of plans.
This could theoretically be mitigated by reducing the costs borne by redundancy. Which is to say, empty seats ultimately cost passengers money. But, really, it sure seems like most flights are full these days. Or something close to it. I think they’ve figured out the empty seat problem (another reason I am not big on cancellation fees – they don’t seem to have trouble putting a new passenger in that seat.
Anyhow, I don’t really fly American and I avoid US Airways when I can. US Airways, see, isn’t US Airways. It’s America West. And now American Airlines is America West, too. The thing about America West is that I have flown with them once. Due to various mishaps, it was a trip that took about 36 hours and six airports. I can’t blame them for the weather problem that got the ball rolling, but after that it was mechanical failures, missed connections due to delays, no available flights to rebook me on, and the continuous adding of more legs to get me where I wanted to go
And those people will be operating the largest airline in the country.