Why merging American Airlines with US Airways is a terrible idea

Christopher Parypa / Shutterstock.com
Christopher Parypa / Shutterstock.com
Any day now, the U.S. Department of Justice will approve the merger between American Airlines and US Airways.

Clearing the world’s largest airline for takeoff will benefit passengers and build a new, highly competitive supercarrier, according to most of the industry’s talking heads. If there’s a consensus among them, it’s that the government ought to rubber-stamp this corporate union quickly.

But the conventional wisdom is wrong. As much as I want to like the proposed “new” American — and I really do — I just can’t.

Passengers will probably pay more and get less. Cities are likely to lose airline service. Many airline employees might end up with pink slips.

The biggest favor the Justice Department can do for air travelers is to deny this merger takeoff permission.

Both airlines have made their best case for the deal. In a Senate hearing last month, US Airways CEO Doug Parker sounded as if passengers are begging the companies to merge, even though they aren’t. He claimed that “the new American will be a stronger and better competitor. We will bring more and better service to more destinations than ever before. We will offer competitive prices and convenient travel times. We will remain committed to all communities — large and small.”

More service? A U.S. Government Accountability Office report warns that 1,665 airport-pair markets will lose one effective competitor in a merger, affecting more than 53 million passengers.

Better service? According to several customer service benchmarks, it doesn’t get much worse than this. The 2013 authoritative American Customer Service Index (ACSI) slapped American Airlines and US Airways with scores of 65 and 64 out of 100, respectively. Last year, US Airways was the second most complained-about airline, and American was number three, according to the Transportation Department.

Who was the worst-performing airline? United Airlines, which ranked dead last on the ACSI (62) and received the most complaints. Yeah, the same United that merged with Continental Airlines.

And consider Parker’s last two promises: low prices and a pledge to continue serving the same airports.

The American Antitrust Institute’s research casts doubt on both. A merger “would substantially eliminate competition on important routes, creating a dominant firm that — acting unilaterally post-merger — could raise fares, degrade service and eliminate consumer choice,” the AAI’s Diana Moss recently said in a congressional hearing.

Also, I wonder if Parker has been to the St. Louis airport recently, which lost almost half its passenger traffic after American acquired TWA in 2002, or to Cincinnati, where air traffic plunged after the Delta-Northwest merger? These former hubs are now ghost towns, despite promises made in a prenuptial delirium.

And then there’s this: At a time when regulators were considering the proposed deal, American brazenly said it would try to squeeze more seats on the McDonnell Douglas MD-80 and the Boeing 737, post-merger. Some air travelers are calling the “new” American “Cram-erican.”

The only Parker claim that may ring true is that a combined airline will be a formidable competitor but not in the sense that he wants us to believe. As the world’s largest airline, it would enjoy a commanding presence in several important markets, including Washington, D.C.

US Airways already controls more than 55% of the takeoff and landing slots at Reagan National Airport, and that number would rise to 67% after the merger. That wouldn’t benefit passengers as much as it would enrich the airline — which will all but control National’s destiny for the next generation — and its shareholders.

Even if the Justice Department forces the airline to shed these slots pre-merger, American would become a colossus of the skies. It wouldn’t necessarily be stronger, just bigger.

Maybe even too big to fail.

By blocking this wrongheaded merger, the government won’t just be saving us from higher prices and dreadful service, it will also be saving American and US Airways from themselves. That is, after all, its job — to promote competition by enforcing our antitrust laws and principles. In a rebounding economy, both airlines have an opportunity to salvage their reputations, independently, and give us the service we deserve.

They should take it.

Would a merger between American Airlines and US Airways be good for air travelers?

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Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at chris@elliott.org. Got a question or comment? You can post it on the new forum.

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  • Steve Rabin

    Won’t happen. The Justice Dept. can’t deny this one after allowing the last two mega-mergers (DL-NW, UA-CO).

  • Carver Clark Farrow

    The question is, “Can American survive” on its own?

  • Ali Jackson

    The anti-merger crowd always fails to address the fact that airlines aren’t making money. Or, if they are, it’s not much. Although no one wants to pay more, the reality is that airfare hasn’t risen at the same rate as costs associated with travel. Take ticket prices vs gas prices:

    In the 4th quarter of 2002, the average domestic airfare was $308.85. In the 4th quarter of 2012 (the latest figures available), that average airfare was $384.81. That represents an increase of 21.03 percent over 10 years. (Figures from the US Dept of Transportation.)

    In 2002, the average cost of gas in the US was $1.42. In 2012, a gallon of gas cost $3.60. That’s an increase of 153.52%. (First number from LA Times; second from AAA.)

    I recognize that gas prices aren’t necessarily a indicator of the cost of flying a plane. (I had trouble finding accurate historical figures for jet fuel prices.) And, I also recognize that ancillary revenue from fees didn’t exist 10 years ago. Still, I think that profit/loss figures for airlines is an important factor that is routinely ignored.

  • Cybrsk8r

    While I agree it will happen, this will be a disaster for National Airport.

    Reagan National will become more of a pariah than it already is. I live in the DC area, and I can tell you, VERY few people prefer to fly out of National. In the last 15 years, I’ve flown out of National twice. My airport preference goes: BWI, IAD, DCA. High fares and limited parking. Yes, it’s metro accesible, but would you want to schlep all your luggage onto an already packed metro car during rush hour.

    Dulles is better, but only because parking is easier. Fares are usually the same as National, but with the merger, that may change. If fares rise at National, people will shift to Dulles. Add to that the fact that Dulles will get Metro-rail service sometime in 2016 when the Silver Line is done, so that advantage for National goes away.

  • Spoken English in Navi Peth

    Very Good Question Clark, But I think They Have to!!

  • johnb78

    That isn’t the choice. The choice is “do we have the merger, a bunch of layoffs, a bunch of service retrenchments, and higher prices” or “does AA go bust and not serve anyone anywhere”. That’s *why* US Air is effectively buying the company out of bankruptcy.

    I reckon it’s better for all concerned to have the merger than to lose a major player altogether.

  • http://elliott.org Christopher Elliott

    American just reported record second-quarter profits. I think it will be just fine without a merger.

  • Liz

    One quarter of exceeding expected earnings does not a heathly company make. Check out their past quarterly statements; this is not a heathly airline.


  • sirwired

    Last quarter was the first time they’ve pulled off an operating profit in many quarters (while the competition has been minting money in the improving economy.) They haven’t pulled off an annual profit in years; it’s a sea of red ink out there.

    If fuel prices take a bump, it’ll be angry red again, with precious little in the way of cash reserves to cover it.

  • sirwired

    Errr… LOTS of people (though not locals) prefer to fly in to National, despite the fact that the MWAA has given every incentive for airlines to fly out of IAD or BWI. It’s hardly a “pariah” the terminal is packed every time I go out of there. (And I always go into DCA when visiting the DC area on business… my time is valuable (and my employer is paying for it) and IAD makes no sense for me.)

    If DCA was such a horrible location, why is there fierce bidding and arguing every time a new landing slot is up for grabs? (Which will surely happen with this merger, as everybody knows US/AA will have to give up some slots.)

    While locals are often better served by IAD or BWI, the easy accessibility to downtown, Arlington, and Alexandria make it a great location for people visiting, especially profitable business travelers. (And even with the silver line, it’s still going to take a long while to take a train all the way out to IAD.) The lack of parking is hardly a deterrent for a business traveler that needs no rental car. And you bring up rush-hour on Metro… well, that’s hardly an argument in favor of the Silver Line or trying to get downtown via taxi from IAD or BWI. I’d much rather cram my luggage on a Metro car from DCA than take twice as long to ride in from IAD, or sit in a taxi stuck in traffic and eliminating any savings I got from flying into another airport.

  • sirwired

    A few points:

    – CVG died mostly because of the Decline and Fall of regional jets. It relied hugely on RJ feeder traffic for the mainline service it had; it did not have nearly as much mainline service as a traditional hub. And yes, it’s position in the middle between ATL and DTW didn’t help.

    – STL died because it was too close to ORD and local traffic couldn’t support it. (And I won’t disagree that everything related to TWA got a raw deal in that merger.)

    – And while you didn’t mention it, yeah, keeping MEM was wishful thinking.

    – US and AA’s hubs mesh rather well; they overlap nowhere. (Despite the DoJ’s suggestion, MIA and CLT don’t overlap. MIA is a terrible location for a domestic hub, (so it won’t take over from CLT), and CLT makes no sense as an LA hub. (MIA gets substantial LA local traffic, in addition to a very profitable cargo operation that relies on the port)) The new hub list will be PHL, CLT, MIA, ORD, DFW, and PHX; (with heavy non-hub service in DCA, LGA, and LAX) that’s a nice network that fills in major holes in both airlines.

    – The DoJ’s own study didn’t use wishy-washy terms like “eliminate competition on important routes” they actually spelled out what that meant. And what it means is that other than DCA, (which everybody (including US/AA) and their dog already knows US is going to have to give up some slots) this merger does not reduce competition to any significant degree. There’s some overlap in LGA, but that airport has plenty of other players that can reshuffle service if US/AA were to try something stupid.

    – Most of the reductions on connecting routes will still leave at least two other airlines that will provide service. Reductions to little other competition on connecting routes will effect less than 4% of the route network; hardly a merger-blocking issue.

    – Mergers don’t automatically lead to service reductions, unless a route or airport was already marginal.

    – AA, on it’s own, is currently not a viable competitor. Bankruptcy did not eliminate the problems with their network; namely an issue competing on the coasts. AA’s fleet is also getting old, and they’ll be hard-pressed to actually pay for that new fleet they’ve ordered. AA liquidating would effect competition (and jobs) a heck of a lot more than US buying them will.

    – Mergers as a way of increasing pricing don’t actually work out that well, as any significant price increases (especially on connecting routes) can easily attract service from another airline.

    – If customers actually cared about customer service or legroom, they would have voted with their wallets long ago. I’m not sure what that has to do with the merger.

    – Lastly, but most significantly, this merger is little different from CO/UA or NW/DL; if those were approved, the DoJ would have to come up with a REAL convincing reason to deny this one.

  • http://phoenixjustice.blogspot.com/ Phoenix Justice

    And that’s the problem. The DOJ and the DOT have rubber stamped so many mergers (not to mention the other federal agencies) I wonder if the nation’s anti-trust laws even matter anymore.

  • http://phoenixjustice.blogspot.com/ Phoenix Justice

    If management can get their heads out of their asses and do something novel in the domestic air carrier market: Treat their passengers like human beings rather than cattle. Be the first legacy carrier to offer more for the same price. Increase customer service. And stop screwing the employees.

    But we all know that won’t happen.

  • Carver Clark Farrow

    As long as customers show that they only care about the bottom line, carriers have no incentive to improve anything. As Ali Jackson below explains. The price of tickets do not keep up with inflation

  • Carver Clark Farrow

    Did we miss the parts in the same article where the so called record second quarter profits are described as unimpressive, below average, and…anermic?

    [A]nalysts say its second-quarter profit is unimpressive when compared with other carriers’ numbers, and is largely the result of cuts in labor costs it was able to initiate as it restructures.

    “AMR’s top-line revenue growth and profitability remains below average vs. its peers, including much better run US Airways,” said Vicki Bryan, senior high-yield analyst at Gimme Credit, an independent research service on corporate bonds. “The sooner the merger is allowed to close, the better the prospects for convincing, sustainable
    operating improvement.”

    Kevin Schorr, vice president of Campbell-Hill Aviation Group, agreed that AMR’s second-quarter revenue growth was “anemic.’

  • Carver Clark Farrow


    I made the very same mistakes on my first flight to DC. Afterwards flying into National was Nirvana by comparison to IAD.

  • Carver Clark Farrow

    Excellent points. But I doubt if it will persuade any of the knee jerk merger-is-always-bad folks.

  • http://phoenixjustice.blogspot.com/ Phoenix Justice

    I agree. 99% of passengers first think of cost, followed by convenience and only care about customer service & comfort when it directly affects them.

  • http://phoenixjustice.blogspot.com/ Phoenix Justice

    Not all mergers are bad, but each proposed merger should be more than rubber stamped by the DOJ and the other governing agencies. Non-binding “promises” are never enough.

  • Alan Gore

    Excellence in business comes from competition. One merger is not necessarily good or bad, but the fewer airlines there are over time, the higher prices rise and the worse service gets.

  • http://upgrd.com/roadmoretraveled MeanMeosh

    That’s the exact question I’ve been asking people for years, every time an AA merger rumor has come about.

    I live in the DFW area, and have had a front-row seat to AA’s management, or more correctly, lack thereof, over the past 10-15 years. It is a broken airline, pure and simple. AA might have made money last quarter, but compared to its competitors, its performance was pretty putrid, and if you go back and look at the whole picture post-9/11, it isn’t a pretty one by any definition. Ever since Bob Crandall left the airline, it’s been one incompetent administration after another, and about the only strategy Tom Horton could come up with was to double down on what AA was already doing – namely, their futile attempts to “win” LAX and JFK, while also increasing capacity and being late to the party on amenities like Economy Plus seating. Meanwhile, AA hasn’t exactly had a compelling product to offer compared to its rivals (thoughthey are trying to change that now), and AA employees hate management, as they’ve never really forgiven them for the executive bonus fiasco back in 2003. Bottom line, I suspect AA would have been toast on its own eventually, probably sooner rather than later.

    Do I look forward to what the combined USAA has to offer, not really, but I hate to break it to merger opponents – five years from now, with no merger, you’ll have no AA, and you’ll still be down to three major legacy airlines.

  • http://upgrd.com/roadmoretraveled MeanMeosh

    Let’s not forget, allowing the airlines to merge doesn’t fit the “we need to re-regulate the airlines” narrative along with the demands that we subsidize extra legroom seating, checked bags, hot meals, and seat assignments together at the front of the plane for the whole family. Regardless of the merits/lack thereof of the merger, it isn’t going to receive a fair hearing from some.

  • http://elliott.org Christopher Elliott

    I really love the demand that we “subsidize extra legroom seating, checked bags, hot meals, and seat assignments together at the front of the plane for the whole family” and I’ve seen you repeat it on another airline propaganda blog.

    I think it’s a funny distortion of what I’ve said, and of my efforts to represent all airline passengers — not just the ones with platinum cards.

    Airlines have a choice. They can handle their customers like cargo, squeezing every last penny of ancillary revenue out of them, or they can treat them like people. I’m afraid that when the dust settles on this merger, the good people in the back of the plane will have it worse than ever.

  • James

    SFO-EWR was a common route that had UA and CO as the only airlines flying. After the merger, fares doubled. At least now Virgin started flying that route, but they haven’t introduced enough competition to get prices back to a sane level.

  • Carver Clark Farrow

    I can’t speak for Man Meosh’s comment’s elsewhere, but his point has merit, certainly enough to deserve a serious discussion. By definition, if an airline seat includes amenities A, B and C. and I don’t need Amenity C, it is to my benefit as well as the airlines to sell me a seat that doesn’t include Amenity C at a lower price.

    But then “Big Brother” decides that all seats should include Amenity C. Thus I lose out on the lower ticket which doesn’t include Amenity C. This is freshman level economics.

    Consider the real life non-travel situation. I often shop at a self-service grocery store. The lack of cashier’s permits the chain to charge lower prices. If “Big Brother” decides all chains should include cashiers and baggers then my self-service savings has just disappeared.

    The point is that customers should have the ability to determine for themselves what their flight experience should be, and not have to pay for goods and services that they do not want.

  • MarkKelling

    Fares doubled on every overlapping CO UA route with the new UA.

  • RoloT

    Just my opinion, but I live in the DC area and do everything I can to use National. Now I do live close to the Van Dorn metro and nothing beats the convenience of the metro, even when it’s jammed. There have been numerous times when my flight lands at DCA and 25 minutes later I am walking in my house.

    My experience with IAD is to avoid this United fortress if possible.

  • RoloT

    Yep, and CLE as a hub will soon be a distant memory ala STL, CVG and RDU.

  • Carver Clark Farrow

    I agree. Some mergers are bad for consumers, others are good. An example of a good one was Whole Foods and the woefully underperforming Wild Oats chain. Curiously the FTC fought it because it reduced the number of specialty organic foods or some nonsense.

  • http://upgrd.com/roadmoretraveled MeanMeosh

    With all due respect, Chris, subsidizing your perks is exactly what you want us to do.

    You and Charlie Leocha constantly call for the government to mandate extra leg room. You want the government to mandate that one checked bag be included. You want the government to mandate that they can’t charge you for “Choice Seats” or whatever they want to call advanced seat assignments. Yet when I asked you on a previous post whether you would be willing to pay more for all of this, all I got back in response was a snarky comment that I wouldn’t be singing my free market tune if I were on your flight where you were cramped in your Economy MInus seat. That tells me all I need to know.

    I tend to agree with your general comment that things will not be as good in the back of the plane as a result of this merger. But, what do you expect? All of the things you push for might be worthwhile causes, and perhaps would make flying a more enjoyable experience, but “treating passengers like people” has a real monetary cost. Are you willing to pay more for your seat, or at least have an honest discussion with your readers about what “better” airline service might cost? If you’re willing to pay $100 more for your ticket to Orlando, then that’s great. I happen to disagree with mandating the extras and paying more, but that’s an honest difference of opinion, and frankly, I think you owe it to your readers to present a serious discussion on the ramifications of what you advocate for. But so far, instead of an honest discussion on this topic, all I see are the typical ad hominem attacks that you like to accuse others of making, like calling other sites that disagree with your opinion “propaganda blogs” and dismissing those that disagree with you as airline industry shills

    That’s my story, and I’m sorry if we have to agree to disagree on this topic.

  • Michael

    This is the fact the writer is not understanding. American Airlines had no viable business plan to save itself after the bankruptcy. It would have gone out if business, which is one less airline for competition.

    So instead of a failed airline, there is a chance to save jobs and provide service to the flying public.

  • jim6555

    Only an idiot can believe that this merger will have any benefits for the consumer or the economy. The only ones that stand to gain are the top executives of both airlines who will receive large bonuses for putting the deal together. It’s time for the Department of Justice to have the cajones to stand up to corporate America and say NO. If they do approve the merger, I suggest that this government agency change its name to the Department of Injustice.

  • jim6555

    If American cannot survive, it’s their own fault. They have made bad decisions throughout the years that have resulted in this once proud company losing it’s most loyal customers to competitors due to poor service and having the oldest fleet of aircraft in the industry. Allowing the merger to go through amounts to a government bailout of AA. What will happen in a few years when the combined AA-US airline is in severe financial trouble? Will we allow it to merge with Delta, United or even Southwest to keep it alive?

  • RetiredNavyphotog

    Don’t wait for US Airways to implement those innovative ideas.
    Customer service…they never hear of it.

  • http://phoenixjustice.blogspot.com/ Phoenix Justice

    Oh, I know. I took a non-stop flight from PHX to ACA on US Airways. Though I was in First Class for the 3.5 hour flight, during the lunch hour, all we got were a bag of “premium” pretzels or nuts. Not even a second bag.

  • http://elliott.org Christopher Elliott

    I think you said it best. Treating passengers like people has a real monetary cost. To which I would add: It should be the cost of doing business.

    If the airline industry is unwilling to treat us as least as well as the animals in the cargo hold, maybe it’s time for strict new laws mandating minimum legroom and humane flying conditions.

  • http://elliott.org Christopher Elliott

    AA had submit a reorganization plan to the bankruptcy court when it filed for Chapter 11 protection. The court seemed to buy it.

  • Carver Clark Farrow

    The industry is quite happy to treat us according to what we are willing to pay for. If we are unwilling to pay for a certain level then so be it.

  • Carver Clark Farrow

    A chapter 11 BK plan means that the airline submitted a plan by which the creditors would be paid less than they were owed, the majority of the creditors agreed, and then the court ensured that it was compliant with the rules.
    It doesn’t mean that 10 years down the road, the company will still be in business.

  • http://elliott.org Christopher Elliott

    The DOJ is supposed to protect us, the taxpayers — not preserve American businesses. If American goes out of business, it will be replaced by a more competent airline that can serve customers.

  • Carver Clark Farrow

    That’s makes no sense. Not even a little, In order:

    1. Whether American’s management is at fault is irrelevant to a merger, particularly as US Airlines will be running the new company.

    2. Even rabidly anti-merger folks like Chris don’t call this a government bailout. The government is not putting any money into the merger

    3. If AA-US airline is in trouble in the future, then the facts and circumstances at the time will dictate the appropriate response.

    Ultimately, your economic paradigm is backwards. The only thing preventing an AA-US merger would be the government. Its government interference which is potentially blocking the normal market corrective force of a stronger business purchasing a weaker business. Calling the government allowing market forces to work a bailout strains credulity.

  • Bill___A

    They allowed Delta and Northwest to merge, as well as United and Continental. The time to prevent these sorts of things has long passed. Although there may be some nuances with this latest merger, the damage has already been done and stopping this isn’t going to really change much overall. The United States has and will continue to have relatively poorly run airlines. Whether people’s particular airports were affected by this merger, or were affected by the last two is a relatively moot point.

  • Carver Clark Farrow

    That’s a red herring.

    The specific thread relates to Michael’s asserting that you don’t understand that AA has no viable plan to emerge from bankruptcy. You countered that AA submitted a reorganization plan which was approved by the court. I explained that while that is true, the bk court is only concerned with the duration of plan, not what happens subsequent to the plan.

    The DOJ and the anti-trust laws are not part of the reorganization plan and is irrelevant to this PARTICULAR sub-thread.
    As far as the assertion, “If American goes out of business, it will be replaced by a more competent airline that can serve customers.” Has history borne that out?
    Consider the demise of Pan AM, Eastern, TWA, Continental etc. The nature of these airlines is that they connected most of the US. They had flights in all 50 states. In the pat several decades, how many new airlines have been created with that level of reach? Southwest perhaps? Any others?

  • Cybrsk8r

    Well, I guess people who are visiting might like DCA, but locals avoid it like the plague. About 98% of the time BWI has a better fare and better schedules than DCA. Southwest, which I favor, has more flights out of BWI than DCA and IAD put together.

  • Cybrsk8r

    Well, living on the orange line you have a way better trip to DCA than most people. I live at the end of the red line. I can actually drive to BWI faster than metro could get me to national, especially with the ICC. BWI is only about 40 minutes away.

  • Jeanne_in_NE

    Chris, I don’t disagree with your basic position, that there should be some point at which the constant economizing (legroom, etc.) stops. But Carver and MeanMeosh have valid points. There’s a cost to the things that you (and many others) feel are basic rights.

    Let’s consider health care insurance as a very good example of “basic rights” vs. cost. Every time a “basic right” gets mandated by a state or the federal government, then the premium for everyone has to go up in order to pay for the very real costs of that basic right. Let’s say the basic right is prescription drug coverage. The average cost per every man, woman and child in the United States is something like $1000/year. If plan A didn’t have prescription drug coverage as part of the plan, and then prescriptions became mandated, then the price of the policy *per person* has to go up $1000, plus the cost of administration. Since the coverage is mandated, I no longer have a choice of which insurance plan to buy, even if I have no need for prescription drug coverage. But, now it’s “the cost of doing business” with the insurance company.

    So – does society have to help subsidize every right to which I think I’m entitled?

  • sirwired

    We ended up how we did because it was utterly obvious to the airlines that this is how we “asked”, via our travel dollars, how we wanted to be treated. I still remember AA’s “More Room In Coach” program. It was an utter and complete failure. Customers were unwilling to pay any more in fares to AA in return for the extra legroom vs. the competition. Same thing with CO and hot meals in coach on long domestic flights. WN and seat assignments. Spirit/Allegiant and the very fact they are still in business.

    Are you asking for laws that clearly override what people are willing to pay for? There have been alternatives to all the things that reduce customer service, and Americans have consistently refused to pay for them. Legroom and checked bags are not safety related; they are none of the government’s business. As long as everything is disclosed ahead of time (I have no problem with laws in that regard), I don’t see the need for laws mandating particular levels of service and comfort.

    Paraphrasing as the flight attendants are so fond of saying at the end of a flight: “We know you had a choice, and we know you chose to be complete and total cheapskates when buying your ticket today.”

  • Cybrsk8r

    Well, I never flew either carrier before. I see no reason why I would ever want to fly them once they merge.

  • sirwired

    DCA’s whole existence is due to non-locals flying into DC/Arlington/Alexandria. This is not unique to DCA. Most large cities have “alternative” airports that can make more sense for locals flying out.

    There’s nothing wrong with this. Locals leaving a large metro area (including it’s suburbs) have very different needs than people flying into a much smaller area.

    DCA will be just fine after this merger.

    P.S. I grew up in the DC area, and my parents still live there. Yeah, I can’t remember the last time my parents flew out of DCA, while I can’t remember the last time I flew into anywhere else.

  • sirwired

    Actually, the bankruptcy court slapped down large bonuses for AA’s executive team.

  • sirwired

    We didn’t end up where we are through malevolence. US carriers used to offer hot meals in coach on long flights, more legroom, free bags, better customer service, etc. And they have all been dropped when customers consistently showed they’d rather save a few bucks on their fare than have better service.

    We’ve had our chance to vote with our wallets for years, and this level of service is what we’ve “voted” for. A management team with their “head out of their ass” would be clearly insane to decide to go to a “high-service” model for the US market; that’d doom them to bankruptcy! (Just ask Virgin America! And look to Spirit and Allegiant for where profits lie!)

  • sirwired

    “Anti-trust” does not mean what you’d like it to mean. It is not, “anti-large-company.” Or “pro-customer-service”. The purpose of anti-trust law is two-fold:

    – To prevent nominally independent companies from colluding (ala the recent Apple/Book Publisher case)

    – To prevent monopolies from leveraging their position into “unjust” profits or shut out competitors.

    Given the rather small profit margins of even the largest airlines, it’d be difficult to argue they are milking consumers for every dollar possible. The barriers to entry for a new airline are rather low; new ones start all the time. And they fail for one of two reasons: Either they over-estimate what Americans are willing to pay for customer service (Virgin America, Frontier), or they under-estimate what they need to charge to be profitable (a very long list of startup airlines who thought the majors charged too much and tried to provide the same thing for less money.)

  • sirwired

    If American goes out of business, how is that better than a merger? I’m pretty sure that AA liquidating would result in a LOT more service reduction, job loss, and consumer harm than US buying them.

    The employees and creditors of AA are taxpayers too.

  • Grant Ritchie

    Couldn’t agree more. I don’t want to pay for airline meals; I don’t even want to pay for Southwest’s peanuts! And I’ve never understood why people can’t take a one-hour flight without having to be served a beverage. Fly me safe, fly me cheap and charge fees for everything else.

  • Michael__K

    Those 2002 domestic airfares included free checked bags, meals, assigned seats, more leg room, free telephone reservations, same-day stand by, fewer restrictions, lower change fees, more generous mileage programs, better customer service, and probably a few more things I’m forgetting.

    Ancillary fee revenue is about 17% of airline passenger revenue today vs. about 1% in 2002. Which means that $384.81 average 2012 fare is really $458.11 if you include all the new fees. That means fee-inclusive fares have actually increased by 48% from 2002 to 2012, not 21%.

    By comparison, according to CPI-inflation, the average commodity increased in price increase by just 28% from 2002 to 2012.

    To be fair, you understate the increase in jet fuel costs. Average jet fuel prices were $.69/gallon in 2002 and $3.06/gallon in 2012 — a 444%(!) increase — according to this source of commodity prices: http://www.indexmundi.com/commodities/?commodity=jet-fuel&months=180.

    35% of airline expenses today are reportedly fuel. If we assume that all other airline expenses rose by exactly CPI (28%) — which we know is a huge over-estimate (labor costs clearly haven’t kept up with CPI; lots of perks and services have been slashed) — then my back-of-the-envelope calculation says that we would have expected fares to rise by 60% since 2002.

    This isn’t intended as an argument in favor of or opposed to this merger. This is just to demonstrate the folly of promoting those oft-cited comparisons of average domestic historical airfares. Fee-inclusive passenger airfares have risen by pretty much what we would have expected them to rise by given the fuel and inflation environment.

  • Carver Clark Farrow

    That’s the ultimate problem. Certain self-appointed consumer watchdogs believe that they know better than the American public what we want. We voted with our wallets. Price was the bottom line. We got what we voted for, but some folks just don’t get that.

  • Carver Clark Farrow


  • TonyA_says

    No minimum specs required? :(

  • Michael__K

    I think we need to be clear about what we’re calling amenities.

    Most everyone will probably agree if we’re talking about meals or baggage fees, which have standalone pricing and where the sticker price is plausibly correlated with the service offered.

    If we’re talking about how passengers who miss connections or suffer long delays or fall too ill to travel are handled — I wouldn’t call those amenities, although some people might.

    And if we’re talking about schemes that involve large fees that either hit customers somewhat randomly or fees that are almost unavoidable (say, a substantial carry-on baggage fee coupled with a substantial checked baggage fee) then that really isn’t about “unbundling” as much as it is about the merchant betting that they can start with a “loss leader” base fare and then more than make up for it by outsmarting their customers.

  • Carver Clark Farrow

    That’s actually a fair point. The short blurbs that we post often lack nuance due to space limitations. To clarify, I am specifically not discussing health and safety concerns. I am directing my comments only towards those items that are nice to have, not must haves. For example, I have no problem with medical devices being exempted from fees.

    Food, checked luggage, etc., are items which have no fundamental reason to be included in the price of a ticket except for the fact that they have historically been included.

  • Carver Clark Farrow

    No, I don’t think so.

    The term amenity is a short hand expression, (and thereby by definition imprecise) way of discussing the various fare rules of a given ticket.

    But any event, the amenity, more precisely fare rules may have immediate tangible benefits such as food, better seat, checked luggage. Or it may have intangible benefits such as no change fees.

    Its ultimately the same thing.

    If I don’t need checked luggage then I am happy to purchase a fare that doesn’t include checked luggage. Maybe my plans don’t require a carry-one that doesn’t fit under my seat. I can do a deposition with my iPad today. Or maybe on one flight I need flexibility and another I am 100 percent certain of the dates and times.

    In each case, the logic remains the same. I pick and choice what I need for a particular flight and would prefer not to pay for additional “amenities”

  • TonyA_says

    Here’s a good one. http://www.ergoweb.com/news/detail.cfm?id=432
    The link to the study is here: https://dspace.lboro.ac.uk/dspace-jspui/handle/2134/701
    So Chris is not just whining when he asks for more legroom for folks like himself and you.

    One piece of Luggage for long flights is quite standard. So is food and drinks. A pillow and blanket, too, to help one get comfy and sleep. Other than access to a bathroom, I’ll end my list here.

  • cheyennecowboy

    Parker has a big head and wants to feed his ego. As far as US Airways is concerned, they cant seem to agree on anything. The pilot seniority lists of America West and US Air have NOT been combined YET, and they merged many years ago. Service on US Airways is awful to say the least. I’ve flown on them several times lately, unhappy personnel, dirty airplanes, lousy on-time service. The last flight on which I flew was 3 hours late getting into Denver coming out of it’s big hub in CLT. You would have thought at a hub station, another aircraft would have been available, but nope! Just sit and wait! As for American, I have to say, I’ve gotten good service. But, when US Airways head, Parker takes over, i’m fearful. Not unlike UAL now being run by the likes of Continental management….the employees call it Con-U. Both airlines have gotten worse in their customer service…there still seems to be a separation there too. There always seems to be anamosity toward the “other airline’s” Personnel, and there isn’t much harmony at UAL/CAL.

  • Carver Clark Farrow

    As I previously stated, I’m not talking about health or safety issues. Chris on the other hand has only discussed comfort with regards leg room.

    But you’re falling into the same trap that Chris is. Why should the price of luggage be included in the base fare of the seat other than “for long flights is quite standard” Would you feel better if we had a negative check-off instead. You could subtract money from your fare if you declined to check luggage?

    And why can’t I have the option of buying my own food and water in the airport rather than having it included in my fare?

  • MarkKelling

    I really believe the goal of most of the mergers is just so that the person who ends up being CEO can say “Mine’s bigger than yours!”

    As far as Co-UA goes, there is still a separation on the planes. UA crews are not allowed to work the former CO planes and vice versa because of their union contracts. On a recent flight from IAH to DEN, they were missing one of the flight attendants so we could not board. The flight was half filled with flight attendants on their way to DEN to work later that day but since they were all former CO crew and the plane was a former UA plane, we all had to wait. Finally got going 2 hours late. I still find I get cheerier service if I am on a former CO plane. None of the crew are as happy as they used to be, but the former CO crew at least don’t seem to hate the passengers like the old UA crews do.

  • Michael__K

    The fact that the word “amenities” is imprecise is exactly why it’s important to be specific if we’re to understand each other’s comments and have a useful dialogue.

    You can argue that giving distressed passengers any rights (like EU261 does) is an “amenity” and Big Brother shouldn’t be involved in that. Heck, why stop there? You could argue that overbooking denied boarding compensation is an “amenity.” Why shouldn’t Big Brother let passengers book cheaper fares at the risk of getting denied boarding with less compensation or no compensation?

    I think it’s useful to distinguish between amenities passengers have complete choice over (like meals) and “amenities” that affect random passengers at random times and the carrier has assymetrical knowledge about the probabilities.

    With carry-on bags, I have no problem giving the 1% (rough guess) of passengers who have the option of carrying no belongings with them a discount. I have a problem when this is used as a gimmick to trick 99% of passengers into believing that airfare A is cheaper than airfare B when it isn’t.

  • Carver Clark Farrow

    No, that’s called nitpicking or obfuscation.

    The specific hypothetical in question (Amenity A, B and C) illustrated a fairly simple point. The term amenity was chosen because the conversation had centered around items such as food and legroom. I don’t think anyone was contemplating denied boarding compensation within the conversation. To use that as an example is to muddy the water, particularly as amenity can be both tangible (food), or intangible (change fees)

    We can easily write with the level of precision that would prevent such “confusion”. But the writing would be far beyond what’s appropriate for blog entries. If you pick up a book of statutes, in each section, the first part lists pages and pages of definitions, just for this very purpose. Its boring. Perhaps you enjoy reading the dictionary. I do not.

    The nature of blog posts is that they are read within the larger context of the localized discussion. Taken out of context, anyone can have a field day, but when a simple straightforward reading occurs in content, then clarify is easily achieved; perhaps not to a legal or moral certainty, but enough for daily conversation.
    As far as the carryon question, that’s a valid point. Today, most people expect a carryon to be free. As such, airlines like Spirit should be forced to make appropriate disclosures. I have no issue with mandatory disclosures. In fact, I champion them. I believe in an informed buying public.

  • JenniferFinger

    Even though the customers of merging airlines would like to think we have a stake in the merger, the fact is that the only persons who have a stake that counts are the shareholders. If they want to merge, and they’re only going to focus on the bottom line, then the merger is going to take place regardless of what customers want.

  • bodega3

    Then fly Spirit. I am ‘traveling’ and want to check at least one piece of luggage for free. Airlines use to treat you like you were a guest in their ‘home’. Coffee, soft drink, something to eat. Now they are like carnival hawkers and walk around with credit card machines. We have bottom feeders to thank for the airlines coming down to the lowest common denominator. It doesn’t just stop there. Look at the condition of the cabins? Dirty, not well maintained. It never use to be that way, but how can to keep things up when bottom feeders want to piecemeal everything :-(

  • BMG4ME

    I am looking forward to the merger. History has shown that the dominant airline’s culture and level of service prevails. Here are examples:

    America West, a nice airline, took over dominant US Airways, and became just like US Airways
    Delta and Northwest merged (I can’t remember who bought who) and the dominant Delta is what we have today, and it’s a great airline.
    Continental and United merged, Continental was better, United was dominant, today we have United Airlines which has none of the greatness of Continental.

    I predict that US Airways, even though it’s buying American (which is the dominant airline) will became just like American and that is good because American is a great airline, US Airways is an awful airline and I look forward to not having to fly US Airways ever again.

    I realize there are some that will disagree, and these are just my opinions.

  • Michael__K

    When Chris advocates treating passengers like people, what makes you think Chris is talking about amenities like hot meals and checked bags and not the “amenities” you admit are ridiculous in this context and outside the meaning of your comment?

    Chris says that MeanMosh’s comment was a distortion of what he said. And to back him up, I don’t see too many articles on this blog with complaints about meal or baggage fees. Stranded passengers with missed connections? severe delays? cancellations? passengers too ill to fly? passengers who receive atrocious customer service and can’t reach a human being to address their reservation issue? — that’s what we see examples of week in and week out.

    And inevitably commenters (not you, but plenty of others) defend the treatment of those passengers using exactly the logic you laid out — that better treatment will raise everyone’s fares, and somehow the market has decided that that would be the greater evil.

    So in the context of this blog, it’s not nitpicking at all — it’s at the core of the debate.

  • Carver Clark Farrow

    Q: When Chris advocates treating passengers like people, what makes you think Chris is talking about amenities like hot meals and checked bags and not the “amenities” you admit are ridiculous in this context and outside the meaning of your comment?

    A: Chris said in his comment adjacent to mine, ” I really love the demand that we “subsidize extra legroom seating, checked bags, hot meals, and seat assignments together at the front of the plane for the whole family” and I’ve seen you repeat it on another airline propaganda blog.
    The comments are adjacent both in physical proximity and time. Any fair contextual reading would necessitate that those are the focus of the discussion.

    As far as MeanMosh comments, I took pains to state that while his point has merit and should be discussed, I am not commenting on his posts elsewhere. Thus, once again, bringing in other issues only serves to muddy the waters and conflate two separate issues.

    I would point out though that Meanmosh’s comments here (I can’t speak for elsewhere) are directed to “subsidizing perks…one checked bags, choice seats and/or advanced seat assignments,” etc. It Is only in reading our of context does denied boarding compensation enter this conversation.

  • Michael__K

    I think what you are quoting as Chris’ own words is actually Chris quoting MeanMosh’s words, which Chris alleges are “a funny distortion” of what he actually said.

  • Carver Clark Farrow

    Then take the following “maybe it’s time for strict new laws mandating minimum leg room and humane flying conditions”. Same thing.

  • Michael__K

    Other countries have minimums, in the UK I understand the mandated minimum seat pitch is 28″.

    I don’t know what Chris’ rationale is, but IMO, at a certain point, I think society (and therefore govt) has an interest in guaranteeing equal access to common carriers. If people of above average height (an inborn trait) don’t fit, then that’s not a discretionary amenity anymore.

  • Carver Clark Farrow

    And meals? Checked luggage?

    Besides tall people can choose to fly airlines with longer seat pitch options and pay the premium.

  • Michael__K

    Maybe I missed it, but I don’t see where Chris pushes for laws requiring meals or free checked luggage (again, I think he’s quoting what he calls MeanMosh’s “funny distortion” of what he said).

  • Tom Evansen

    Chris, you are looking at this incorrectly. If you merge two airlines with ACSI scores of 65 and 64, you get a 129, which is by far the best airline on the planet!

  • http://elliott.org Christopher Elliott

    You didn’t miss anything. The airline apologists are just busy defending the indefensible practices of an industry that hates its own customers. Twisting my words is is hardly their worst offense.

  • John Baker

    “CVG died mostly because of the Decline and Fall of regional jets. It relied hugely on RJ feeder traffic for the mainline service it had; it did not have nearly as much mainline service as a traditional hub. And yes, it’s position in the middle between ATL and DTW didn’t help.”

    Sorry CVG is my primary airport and I lived here during the hey days. Your statement is only partially correct.

    Before DL bought and destroyed COMAIR, CVG was COMAIR’s primary hub with its own dedicated terminal containing 70 plus gates. So yes some of the 750 departures a day that CVG had at its hey day were the result of COMAIR but that’s not the whole picture.
    In addition to the dedicated RJ terminal, CVG had 50+ mainline gates dedicated to DL. CVG also had 4 crew bases and multiple international flights a day. All of which (accept for a single flight to Paris that GE essentially pays to keep running through cargo) are now mostly gone. CVG has been relegated to almost exclusively RJ service (contrary to what your note insinuates) with very few mainline flights a day anymore (150 total departures a day. I’d guess 100 are RJs). Also none of the major cutbacks happened until after the merger. It had very little to do with the decline of RJs.

    So… Memphis, who have now lost their hub, and Cincinnati, who is barely hanging on, lost in the merger war.

  • TonyA_says

    How can you really say it is EXTRA legroom. We used to have more then it was drastically reduced. Chris is just asking a few inches back.

  • TonyA_says

    I really do not take short flights anymore because I hate it. Short flights are really shuttles and it is hard to expect much from them.
    Most of the flights I take are long, real long. No way to buy food and drink for my 15-16 hr. flight from JFK to HKG (plus more after that). And there is also good reason to have at least one checked luggage for those long flights.
    Come to think of it, has anyone made a study on how overloaded bins affect airline safety?

  • John Baker

    @TonyA_says:disqus but retailers do the same thing all the time. They shrink portion sizes instead of increasing costs and eventually relaunch the same size under a new name and higher costs (example… a local pizza joint now sells 14″ pizzas as larges and 16″ as XL. When I was a kid, 16″ was a large. Guess what the 16″ costs more than the 14″. A couple of cereal manufacturers do the same thing).

    Chris wants the inches back without the added cost. We know that’s not going to happen. If the market demand was there for the greater seat pitch, the econ +, or whatever marketing name the airline chooses, seats would sell out far faster than steerage and they don’t.

  • NOLA

    You are clueless. I also live in the area and do most anything, including paying higher fares, to fly roundtrip DCA and I know many others who do the exact same thing.

  • Carver Clark Farrow


    I have no desire to twist your words. Then let’s set the record straight once and for all.

    Do you believe that the government should mandate any the following and if so which, if any?

    Minimum seat pitches?
    One or more pieces of checked luggage?
    Water? (Routine, not during irregular opts)
    One or more pieces of carry one luggage?

    Simple straightforward questions.

  • Carver Clark Farrow

    No one is disputing that checked baggage is a good thing, especially on long hauls. The only question is how do we pay for it. Is the price included in the base fare for all to pay, or is it a la carte so that payment may be individually? And equally importantly, is it a primarily private transaction, or does the government have an interest such that regulation is warranted.

  • TonyA_says

    Not sure about that Carver. Traditionally, we have always viewed PUBLIC TRANSPORTATION as one that accommodates the general needs of the public – and that means man and his luggage (by man I mean women, too).

    You can take a reasonable amount luggage with you when you ride the bus, taxi, train and subway (and previously airlines) without worrying to pay extra.

    For some reason, classic airlines were allowed to copy Ryanair. It is ironic that the original low cost carriers Southwest and Jet Blue are the ones left with free bags.

    As one who sells travel, I am still conflicted about this ala-carte and unbundled pricing. Common (and not so common) carriers get to use a lot of publicly owned assets without really having to pay the full cost. Best example is Carnival Cruise lines use of the US Coast Guard.

    Common carriers are a special kind of business. They are not just pizza parlors. They provide a vital role (transportation) to society.

    So taking this down to an equation of dollars and cents with baggage fees and food and water is something that is truly debatable. Someone (for me the gov’t.) should really set the minimum specs if the industry cannot police itself. By that I mean if the general public is so pissed off then it needs to be fixed.

  • Carver Clark Farrow

    Interesting. While airplanes may be public transportation, I don’t know if analogies work well. For a variety of reasons airlines have their own rules that are very different from buses, trains, etc

    But the question remains. Checked bags are not free. The customer always pays. The only question is which customer pays and how.

  • TonyA_says

    Nothing’s really free. The question is whether ONE bag should be included in the fare. My opinion is YES for simplicity, convenience, and maybe safety.

    Boeing made a study on aircraft turnaround times a while back.
    See: http://www.boeing.com/commercial/aeromagazine/aero_01/textonly/t01txt.html

    The study shows how boarding an aircraft is getting longer and longer.

    I’m sure it is worse today as passengers hunt for valuable overhead bin space (to avoid baggage fees). Also, the paid seating and boarding arrangements probably makes the problem worse.

    I think longer boarding times is a public concern, too. It is not only inconvenient but also a total waste of time. I wonder, if Southwest and Jetblue can do it, inclusive bag(s), why can’t the others?

  • Carver Clark Farrow

    Should the government be regulating simplicity, convenience, and time wasting? Safety, no question at all. But, I’m not convinced about the other three.

    Ultimately, this is about one’s political paradigm. Which do you prefer, the market or the government. For me, I prefer the market to regulate and then the government steps in for cases of legitimate public concerns, chief amongst those would be safety.

  • TonyA_says

    Probably a useless discussion anyway. The Government can’t or won’t even regulate the too-big-to-fail banks so why should they care about airline passengers? These are just my dreams :)

  • Carver Clark Farrow


  • Emily Porterfield

    I think there must be some studies on this. I fly Southwest when I can, and usually check one bag. Even though Southwest offers 2 bags free, every flight I’m on, people drag their overstuff baggage on, sometimes sneaking in a 3rd bag. The thinking behind this is (a) they don’t want to have to go to baggage claim and wait for their luggage; and/or (b) they don’t want to lose their luggage and file a claim with baggage services. Yes, it seems like such a great thing when other airlines are charging, but my guess is the flight attendants are not happy about it, when they have to tag the overflow bags which also slows turnaround.

  • TonyA_says

    Sometimes when you have multiple players or stakeholders in a position that are at odds with each other you get a real lousy situation that is deadlocked and cannot be improved.

    Customers want less mishandled bags and want to get out of the airport quicker (time is money).

    Agents and FAs don’t want to handle many gate checks and assist in loading overheard bins that make flights late (time is money).

    But it seems like the airlines are more interested in collecting fees than in increasing efficiency and saving time. So how do we get them thinking in the same direction as their own employees and passengers? If there isn’t $$$$$$$ in it for them PERSONALLY then they do not give a F$*&.

    The collection of ancillary fees has NOT led to increased quality or customer satisfaction. But management could care less since there is less and less competition, especially after mergers, and nothing is forcing them to change. Notice how many of the new stuff is cosmetic – like the new paint and logo on old AA airplanes.

    The real game changer is complete abolition of the cabotage rules. Without more competition there is no pressure to do any good.

  • Cybrsk8r

    Well, you just go right ahead, buddy. If it works for you, fine. Truth is, I hope you continue to fly out of National. One less person at my airport is just fine by me.

    I’d have to be pretty stupid to fight my way from Gaithersburg thru the hideous northern VA traffic to National. And for what? To pay more?

    Besides, Southwest is my favorite airline, now. They have a few flights out of Dulles, and none at all out of DCA (unless you count AirTran). There are literally twice as many departures for Southwest out of BWI as there are for National and Dulles combined.

  • Puck2u

    My usual departure/return airports are STL/EVV. I have lived through STL being a very busy airport to the dead zone which does mean less confusion (sort of) at TSA stations. I have watched Ozark being bought out by TWA which had lost slots at ORD so made STL the center of their hub and spoke system. For a few years I could fly packed flights to the UK thus avoiding ORD. Carl Ican started shedding TWA assets. So less flights were going long distances. American came in and slowly started moving all flights to ORD usually in “Regional Jets” which is not my preferred size of aircraft. Cramped and now always full with wait lists. Next up, many flights seemed to go to IAH in the most dismal excuse for a gate area since ORD opened as a feeder to MDW in the 1950’s. Those particular gates at IAH do NOT have jetways so now in my feeble years means throwing any carry on to the ground and then carefully hobbling down a rickety set of stairs. EVV has gone through similar transitions. USAir has been an alternative at both STL and EVV. Anyone want to bet that will change if AA and USAir merge? I have no idea of how many Boeing 7–‘s fly out of either anymore but not many. An occasional MD80 is about it.