American-US Air merger already getting bad reviews and it hasn't even happened*

americanair3.jpgThat's to be expected - combining legacy carriers rarely amounts to a great deal for travelers. Actually, it could turn out to be downright terrible for certain routes and certain fares (though probably not for L.A.). The boards of both carriers are meeting today and an announcement could happen this week, but already the takeaway is not encouraging. "If you take one troubled airline and combine it with another, all you get is a larger catastrophe," writes Stanford University Prof. Jeffrey Pfeffer on Bloomberg. Travel columnist Joe Brancatelli is also doubtful:

The boiler-plate patter from the carriers will surely be that the combination will make the new airline large enough to compete on a world scale. That's baloney. History has shown that any merger between legacy carriers has eventually resulted in a smaller airline. In fact, the entire commercial airline industry is shrinking. A combined US Airways-American would almost surely be smaller, too. Obvious places to cut: Phoenix, the current hometown hub of US Airways. Just as Delta found it impossible to maintain the size of Northwest's Memphis hub because it was sandwiched between Delta's Atlanta hub and Northwest's larger Detroit/Metro hub, the new American would be hard-pressed to justify Phoenix because it sits between American's hometown hub of Dallas/Fort Worth and its crucial operations in Los Angeles. US Airways' large international hub in Philadelphia would also be a target.

As I mentioned on this week's Business Update on KPCC (now at 7:25 a.m. on Tuesday), the process of consolidation will be very long and complicated:

Mark Lacter: Whenever two big airlines are combined, Steve, it often means fewer flights and higher fares, but a lot depends on the individual markets they're serving. Now, assuming that a merger does happen (and the boards of American and US Air are set to meet tomorrow), the local impact is likely to be fairly limited. LAX is a hub airport for American, it's the second-busiest carrier (after Southwest) with a market share of about 13 percent. US Air by contrast ranks ninth at LAX, at about four percent. Most importantly, there's just not much overlap between American and US Air. So, if anything, the merger could actually bolster the airline, especially on the Pacific routes where United Airlines still has a foothold - and maybe the shorter routes that have been controlled by Southwest.

Steve Julian: Are these changes likely to happen quickly?

Lacter: Not at all. Combining two airlines is an enormously complex process that can easily drag out for years. They'll have to figure out what to do with the reservations systems, the planes, the landing slots - you know, United and Continental merged more than two years ago, and they're still having glitches. By the way, Steve, if the American-US Air deal does happen, there will be only four major U.S. carriers: United, Southwest, Delta, and now American. This is a very different industry since deregulation back in the late 70s.

*Update: As expected, the boards of both companies approved the merger that will create the world's largest airline. The deal will be formally announced Thursday morning.

More by Mark Lacter:
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Should Twitter be valued at $18 billion?
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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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