Airlines: Merger shouldnt reduce Bermuda flights
Bermuda should not suffer any reduction in flights to and from the US as a result of a mega-deal merger between American Airlines and US Airways.
Currently both carriers connect the Island to five separate US cities. Neither flies on the same route, making it less likely that a service will be consolidated as a result of a $11 billion merger, which is in its final stages of negotiation.
The new entity will retain the American Airlines name and become the worlds biggest carrier with annual revenue of $38.69 billion based on 2012 figures.
Bermuda is likely to see minimal change, if any, to the services it presently enjoys from the two airlines. American Airlines currently connects the Island to New York and Miami, while US Airways links Bermuda to Philadelphia, Charlotte and Washington.
A spokesman for American Airlines said: At this time, we have no plans to reduce service. The service these two carriers provide into Bermuda are not duplicative.
The goal of the merger is to provide additional service for our valued customers. These two examples [of separate cities being served] are exactly part of the synergy this merger provides.
The spokesperson continued: While we do not speculate on future pricing, Bermudas service by both carriers today remains very competitive.
Carl Paiva, CEO of Hamilton travel agency C-Travel, said: Its too soon to predict the impact on us.
We will see how things pan out. US Airways is very clever in keeping separate brands. We have a lot of respect for US Airways.
Mr Paiva, who received updates on the merger directly from both airlines, added: Airlines are now learning they cannot do without agents.
The airlines that cut agents commission have been forced to merge. Travel friendly airlines such as Delta, US Airways and Air Canada realise our contribution.
If the merger is approved it is expected the two carriers will become one, under the American Airlines name, in the third quarter of this year.
Doug Parker, chief executive of US Airways, will run the new airline. He said: One of the really nice things is how complementary the route networks are. Of the 900 routes, only 12 have any overlap, which is phenomenal.
We are going to need to keep all the hubs in place, the cities we fly to we will need to continue to fly to.
It is estimated the new airline will generate $900 million of additional revenue and benefit from savings of around $150 million.
American is currently the third largest US airline, while US Airways is the fifth.
Together they will eclipse the worlds current number one carrier United Continental, with an estimated annual revenue of $38.69 billion more than $1.5 billion ahead of their biggest rival.
American Airlines CEO Tom Horton is to become the chairman of the new airline.
He said the airlines do not expect to have to divest any assets to secure US antitrust approval, or to have difficulty winning endorsement from the European Union competition regulators.
Whether or not prices will rise as a direct result of the merger remains to be seen.
Analysts point to the past mergers between Delta and Northwest, and United Airlines and Continental, which did result in price rises on some routes. (See more on pricing Page 27)
Airline analyst Vaughn Cordle, of Ionsphere Capital, said the likely phasing out of older, less efficient aircraft and the restructuring of benefits could help the new company lower its costs without raising fares.
The new airline plans to take delivery of 607 new aircraft, including 517 narrowbody aircraft and 90 widebody international aircraft, most of which will be equipped with advanced in-seat in-flight entertainment systems, in-flight Wi-Fi, and four to six inches of additional legroom.
He said the combining of the two carriers to form a new American, should mean that loyalty programme members have more opportunities to earn and redeem miles from an expanded global network of routes and partnerships.
Until the two airlines are officially merged, each companys frequent-flier programmes will continue to earn benefits for passengers as normal. Details of a consolidation of the programmes will be given at a later date, the companies said.
American will remain in the Oneworld airline marketing group that includes British Airways. US airways is a member of the Star Alliance led by United.
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