If American merges with US Air, what does it mean for LAX?

americanair.jpgThe combining of two big carriers will sometimes mean fewer flights and higher fares, although the impact at Los Angeles International might be more limited than at other locations - say, Phoenix, where US Air has a major presence (the airline is based in Tempe). American is the second-busiest carrier at LAX, carrying 9.4 million passengers and having a market share of 12.8 percent (Southwest is first, at 16.6 percent). US Air ranks ninth, at 3.6 percent. While US Air would effectively take over American by bringing it out of Chapter 11 bankruptcy protection, it might take the bigger hit in Los Angeles. Aside from service to cities such as Philadelphia, Charlotte, and Phoenix, US Air flies many of the same routes as American. Except that LAX is a hub airport for American and thus has a much bigger presence. (Just a thought: Both airlines fly to SF, so perhaps they'll try to compete more aggressively with Southwest.) The two carriers have been talking about a merger for many months, so I'm sure that executives at both airlines have preliminary plans on schedules and routes. But it often takes many months to sort those things out, especially since it involves bringing together all sorts of complicated infrastructure. Another issue would be landing slots: US Air will be losing its three gates at the congested Terminal 1 as Southwest expands its facilities. It also flies out of Terminals 7 and 8 through codeshare arrangements with United. American uses Terminal 4. Any service reductions could open up positions for other carriers. This morning, the WSJ reports that a deal is finally within sight.

American's bondholders have decided a merger would enable them to recover more money. And the airline's unionized pilots, flight attendants, mechanics and ground workers have long lobbied for a marriage, at one point even negotiating secret contracts with US Airways on how they would be treated if the companies joined forces. A combined airline would likely retain the American name and remain based in Fort Worth, Texas. The airlines are hopeful the marriage eventually will generate increased revenues and cost savings. That would mainly come from eliminating duplicative back-office and operational functions, downsizing US Airways' Tempe, Ariz., headquarters, reducing management ranks, sharing airport gates and jettisoning some aircraft.

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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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