American Airlines-US Airways merger deal has many implications apart from the formation of the world’s biggest airline. The $11bn (£7bn) merger will bring American Airlines closer in value to rivals Delta Airlines and United Airlines. But the American Airlines-US Airways merger is likely to give rise to certain negative repercussions which are a cause of concern.
The American Airlines-US Airways merger deal is likely to pose competition problems as it would leave more than 70% of the passenger business in the hands of four behemoth airlines, which would have unassailable holds on most of their hub airports. But both American Airlines and US Airways have argued that the merger will give more ammunition to American to compete with Delta and United, both of which have entered into mega merger deals of their own recently. Analysts also feel that the American-US Airways merger is not likely to result in a rise in air fares because they compete directly with each other in just 12 routes.
The details of the American Airlines-US Airways merger include that a lion’s share of the new company will be owned by American Airlines’ bankruptcy creditors, who will have 72% of the company. The new carrier will be run under the American Airlines brand, but the chief executive will be the current US Airways boss, Doug Parker. The aim of the merged entity is to offer more than 6,700 daily flights, to serve 336 destinations in 56 countries, have more than 900 planes and to employ 95,000 people.
The Senate Commerce Committee chairman Jay Rockfeller also expressed concerns that the American Airlines-US Airways deal might pose danger through fewer choices for consumers, higher air fares, and reduced air service to small-and-medium sized communities. But the real picture is that the US aviation industry has been making losses for years, which could end up in higher ticket prices in future.