Although no official announcements have been made, sources close to US Airways and American Airlines have confirmed to USA Today that the two airlines have agreed in principle on a merger that would result in the creation of the world’s largest airline. American filed for bankruptcy protection from its creditors over a year ago and the airline needed to find some help in order to continue normal operations. If this merger is approved as expected, nearly 90% of all US commercial air travel will be controlled by four huge airline conglomerates.
Because of mergers in recent years - Delta and Northwest, Southwest and AirTran, and United and Continental - there is practically no realistic competition for mainstream air travel. Most analysts anticipate that this will eventually lead to higher ticket prices for consumers, but the price increases will probably be gradual.
What is more interesting is the question of whether combining two average-to-weak airlines can somehow create a strong one. American was already in bankruptcy - and no one would claim that US Airways was knocking it out of the park - so how does combining the two companies bring any stability? If anything, logistical issues and management overhead have only increased for the new, larger company. With only four primary carriers left, the race would appear to be on for ultimate supremacy. Eventually, the more efficient operation will inevitably consume the weaker three. It should be fun to see how that turns out.
Because of mergers in recent years - Delta and Northwest, Southwest and AirTran, and United and Continental - there is practically no realistic competition for mainstream air travel. Most analysts anticipate that this will eventually lead to higher ticket prices for consumers, but the price increases will probably be gradual.
What is more interesting is the question of whether combining two average-to-weak airlines can somehow create a strong one. American was already in bankruptcy - and no one would claim that US Airways was knocking it out of the park - so how does combining the two companies bring any stability? If anything, logistical issues and management overhead have only increased for the new, larger company. With only four primary carriers left, the race would appear to be on for ultimate supremacy. Eventually, the more efficient operation will inevitably consume the weaker three. It should be fun to see how that turns out.
