The planned merger of American Airlines and US Airways would create the world’s biggest airline and bring together the third- and sixth-busiest carriers at Buffalo Niagara International Airport.
The two carriers that are now combined offer 22 percent of all outbound flights, and their union raises questions about the impact on service and fares.
There is little overlap among their routes out of Buffalo, with American providing service to Chicago, and US Airways flying to Boston, Philadelphia and other major East Coast airports. This bodes well for local travelers, but the deal’s full effect won’t be known for some time.
“I think it is too early to actually speculate as to how a merger would affect our airport,” said Niagara Frontier Transportation Authority spokesman C. Douglas Hartmayer. US Airways is the third-busiest local carrier, and American the sixth.
The American-US Airways marriage is the latest in a series of airline combinations in the last five years, following the mergers of Delta with Northwest, United with Continental and Southwest Airlines with AirTran Airways.
The boards of American and US Airways approved the $11 billion merger Wednesday, and the companies announced the deal Thursday.
American’s parent company, AMR Corp., still is under federal bankruptcy protection and will need the court to approve the deal. US Airways shareholders also must vote for a merger, and the transaction is subject to approval by federal regulators.
The merger would leave the country with four major airlines: the new American, United, Delta and Southwest.
American would have 900 planes, 3,200 daily flights and about 95,000 employees, not counting regional affiliates.
“The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace,” US Airways CEO Doug Parker said in a statement. “Our combined network will provide a significantly more attractive offering to customers, ensuring that we are always able to take them where they want to go.”
The airlines said they expect $1 billion in combined benefits from the merger. The companies could save money by combining their reservation systems, for example, or by using their joint buying power to negotiate better prices on fuel or spare parts, said Harold Star, a visiting assistant professor at the University at Buffalo School of Management who studies business strategies.
“The real question is: How sure are you in your analysis of the expected efficiencies?” said Star, who pointed out that the final amount saved on training or maintenance costs hinges on whether the airlines fly the same planes.
As recently as 2004, US Airways was the No. 1 carrier at the Buffalo airport, with 27 percent of flights and 22 percent of passengers.
But Southwest and JetBlue now control 54 percent of passengers and 39 percent of flights going out of Buffalo, according to the NFTA. “US Air was dominant for years, until JetBlue and Southwest came,” Hartmayer said.
American, which flies out of Buffalo under its American Eagle name, offers only outbound service to O’Hare Airport in Chicago, while US Airways flies to Boston; Charlotte, N.C.; Philadelphia; and Reagan National in Washington.
Kenmore travel agent Steven J. Elliott said the airline’s service through Chicago is convenient for people heading to the West Coast and the southwestern United States.
However, he said, US Airways has several early morning flights, allowing vacationers to fly out of Buffalo by 5:30 a.m., connect through Philadelphia and arrive in Cancun, Mexico, before 11 a.m. “They really have some of the best schedules,” Elliott said.
US Airways uses five gates at the airport, while American Eagle has one gate, out of the 24 total gates, including four that are currently open, Hartmayer said. US Airways has six ticket stations inside the airport terminal, while American Eagle has three.
Sen. Charles E. Schumer, D-N.Y., raised concerns about such a merger in May, citing its possible effect on service to upstate New York airports. “I will be watching like a hawk to make sure that the thousands of jobs and service to 13 New York cities is maintained as part of this merger,” he said in a statement.
Further consolidation could raise airfares, as the price of a domestic round-trip flight has climbed by more than 11 percent since 2009, according to the Bureau of Transportation Statistics.
UB’s Star, however, said competitive pressure has kept fares in check in recent years, with airlines charging increased fees for bags and prime seats to find new ways to raise revenue.
“No reason to see [fares] go up,” Star said, “because there’s still too many actors on the market.”
The Associated Press contributed to this report. email: swatson@buffnews.com
The two carriers that are now combined offer 22 percent of all outbound flights, and their union raises questions about the impact on service and fares.
There is little overlap among their routes out of Buffalo, with American providing service to Chicago, and US Airways flying to Boston, Philadelphia and other major East Coast airports. This bodes well for local travelers, but the deal’s full effect won’t be known for some time.
“I think it is too early to actually speculate as to how a merger would affect our airport,” said Niagara Frontier Transportation Authority spokesman C. Douglas Hartmayer. US Airways is the third-busiest local carrier, and American the sixth.
The American-US Airways marriage is the latest in a series of airline combinations in the last five years, following the mergers of Delta with Northwest, United with Continental and Southwest Airlines with AirTran Airways.
The boards of American and US Airways approved the $11 billion merger Wednesday, and the companies announced the deal Thursday.
American’s parent company, AMR Corp., still is under federal bankruptcy protection and will need the court to approve the deal. US Airways shareholders also must vote for a merger, and the transaction is subject to approval by federal regulators.
The merger would leave the country with four major airlines: the new American, United, Delta and Southwest.
American would have 900 planes, 3,200 daily flights and about 95,000 employees, not counting regional affiliates.
“The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace,” US Airways CEO Doug Parker said in a statement. “Our combined network will provide a significantly more attractive offering to customers, ensuring that we are always able to take them where they want to go.”
The airlines said they expect $1 billion in combined benefits from the merger. The companies could save money by combining their reservation systems, for example, or by using their joint buying power to negotiate better prices on fuel or spare parts, said Harold Star, a visiting assistant professor at the University at Buffalo School of Management who studies business strategies.
“The real question is: How sure are you in your analysis of the expected efficiencies?” said Star, who pointed out that the final amount saved on training or maintenance costs hinges on whether the airlines fly the same planes.
As recently as 2004, US Airways was the No. 1 carrier at the Buffalo airport, with 27 percent of flights and 22 percent of passengers.
But Southwest and JetBlue now control 54 percent of passengers and 39 percent of flights going out of Buffalo, according to the NFTA. “US Air was dominant for years, until JetBlue and Southwest came,” Hartmayer said.
American, which flies out of Buffalo under its American Eagle name, offers only outbound service to O’Hare Airport in Chicago, while US Airways flies to Boston; Charlotte, N.C.; Philadelphia; and Reagan National in Washington.
Kenmore travel agent Steven J. Elliott said the airline’s service through Chicago is convenient for people heading to the West Coast and the southwestern United States.
However, he said, US Airways has several early morning flights, allowing vacationers to fly out of Buffalo by 5:30 a.m., connect through Philadelphia and arrive in Cancun, Mexico, before 11 a.m. “They really have some of the best schedules,” Elliott said.
US Airways uses five gates at the airport, while American Eagle has one gate, out of the 24 total gates, including four that are currently open, Hartmayer said. US Airways has six ticket stations inside the airport terminal, while American Eagle has three.
Sen. Charles E. Schumer, D-N.Y., raised concerns about such a merger in May, citing its possible effect on service to upstate New York airports. “I will be watching like a hawk to make sure that the thousands of jobs and service to 13 New York cities is maintained as part of this merger,” he said in a statement.
Further consolidation could raise airfares, as the price of a domestic round-trip flight has climbed by more than 11 percent since 2009, according to the Bureau of Transportation Statistics.
UB’s Star, however, said competitive pressure has kept fares in check in recent years, with airlines charging increased fees for bags and prime seats to find new ways to raise revenue.
“No reason to see [fares] go up,” Star said, “because there’s still too many actors on the market.”
The Associated Press contributed to this report. email: swatson@buffnews.com