Advertisement

What a Potential US Airways/American Merger Might Mean for Frequent Flyers

by on February 7, 2013 · 56 comments

in American, US Airways

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our Advertising Policy, visit this page.

News is swirling at a fever pitch about an imminent American Airlines/US Airways merger as soon as next week. I’ve reported on the possibility in the past as well as answered reader questions about what this might mean for both airlines. Although a deal seems to be close, a lot of things do fall apart at the last minute, but if this does happen, I wanted to lay out my thoughts on what we can all expect and how you can prepare.

airlines_takeover_120419_480x360

Will we be seeing more of this in the days to come?

Who Will Be In Charge?

Although it’s a larger airline with a more global reach, American Airlines seems to be the weaker link in this scenario, especially after a contentious bankruptcy filing that the airline is still dealing with. It’s no secret that US Airways has been courting American’s management and unions, and because of that I think that when the two merge, it will be US Airways’ senior management that takes the joystick. Reportedly Doug Park (current US Airways CEO) will lead the new airline and AA’s chief Tom Horton will be the “non-executive Chairman”, which basically means he politely steps to the side. Not that surprising since he has only been at the helm of American since November 2011, when then CEO Gerard Arpey stepped aside on the same day the bankruptcy was filed.

Which Alliance?

The new airline, which I suspect will continue to be called American Airlines, will go with the Oneworld alliance, which American is a part of, rather than the Star Alliance, which US Airways currently belongs to. That means it will go from having 27 partners down to just 11, but that still includes great partners like British Airways, Cathay Pacific and Qantas.

Frequent Flyer Program Changes

In terms of mileage programs, I think the merged airline will continue to use American’s AAdvantage program with its earning and redemption rules since it’s much more sophisticated than US Airways. However, I would predict that the new airline will take US Airways’ model for elite status and expand its program to include four tiers (25,000/50,000/75,000/100,000) instead of the three (25,000/50,000/100,000) that American currently has.

I don’t think we’d see a complete merger of AAdvantage and Dividend Miles until about 12-18 months after the formal announcement (probably toward the longer end of that time frame), so there would be no immediate changes to the mileage programs, although perhaps the two would let members transfer miles between their accounts like United and Continental did.

For that reason, it could make sense to buy US Airways miles cheaply if they run any more buy miles promos and then use them to redeem through AAdvantage. In terms of buying miles, it’s really up to you. I think buying miles at 1.9 cents each (with a 100% buy-miles bonus) is a questionable value proposition even if you really know how to maximize their award chart. I personally prefer to buy them at a lower rate like 1-1.1 cents each through methods like their Mileage Multiplier.

What do you think the new logo will look like?

What do you think the new logo will look like?

Redemption Changes
Although many folks (myself included) groaned at the issues surrounding the merger of Continental OnePass and United MileagePlus, when they merged, it can be argued that the final program did combine some of the best aspects of each original program. For instance, prior to the merger, you could redeem United miles for one-way awards, but not Continental miles, but that changed after the airline merger but before the joining of the two frequent flyer programs. Prior to the merger United.com hardly showed partner award availability, but after they switched to the continental.com software that made online booking of awards much easier. Clearly, there were some negative changes as well- including the loss of some solid partners like Virgin Atlantic and Qatar, but I don’t think the end result was a huge devaluation of United/Continental miles.

I’m hopeful that post-merger, features of US Airways’ program – such as the fact that you can’t redeem for one-ways and that once you commence travel you can’t make changes to your award itinerary – would change for the better. I also hope that the new airline adopts American’s lower fee structure on award tickets and with a larger route map, the systemwide upgrades given to Executive Platinum members will be more useful.

That being said, I can’t imagine some of the amazing US Airways redemptions (like 90,000 miles roundtrip to Northeast Asia in business class or 110,000 miles roundtrip to South Africa or Australia in business) will last forever. With a new merged frequent flyer program, I’d expect them to align their redemption rates to be in line with partners, so I’d recommend redeeming your US Airways miles at your favorite redemptions sooner than later. As with all great deals, they don’t last forever. Check out this post for maximizing US Airways miles and this one on leveraging American’s international gateway stopover “trick,”, which might also go away.

AA planes will probably keep their new paint jobs.

AA planes will probably keep their new paint jobs.

Combining Fleets

You might have been following American’s recent rebranding launch with newly painted planes and plans to bring new 777-300ER’s and 737-800’s into service along with new premium class products. I don’t think a merger will affect those plans – in fact, I think the airline will try to make sure those stay on track since it’s a good bid to bring back customers.

US Airways already has a great international premium product with its Envoy class – it was actually US Airways that introduced this business class configuration on its international fleet of A330’s with lie-flat beds, though Cathay got most of the attention – so I don’t think there would be an immediate push to standardize products across the fleet and to make US Airways planes three-class like American’s.

Hubs

Currently US Airways has hubs in Phoenix, Charlotte and Philadelphia. With a merger, I see them winding down their Charlotte and Phoenix hubs in favor of American Airlines bases like Los Angeles and Dallas while maintaining Chicago and New York to match what competitors like United have going. US Airways is also a huge presence at Philadelphia international airport and while I don’t see them unwinding that hub, I bet they continue to build up their New York hub since that is key to scoring the lucrative business and premium international market.

Credit Cards

Update: The public offer for the Chairman’s Preferred US Airways Dividend Miles Premier World Mastercard has expired, but you still might be able to apply for it – check out this post for more information on it as well as a version of the card that comes with 35,000 bonus miles and the first year’s annual fee waived. The current offer is 30,000 bonus miles with first purchase and up to 10,000 bonus miles for a balance transfer within 90 days and an annual fee of $89 that is not waived.

This is obviously an important consideration since travel credit cards are a huge source of frequent flyer miles in both programs. Right now, the US Airways Chairman’s Preferred Premier World Mastercard is one of the best airline credit card offers out there at the moment with a first-use bonus of 40,000 miles, a 10,000-mile bonus for making a balance transfer within 90 days, and 10,000 bonus miles each year upon the account anniversary. I think it’s a good deal anyway, so whether the merger goes through or not, I’m thinking about getting this card in a future churn.

Might as well get in on the current credit card bonuses from both airlines while they're still around.

Might as well get in on the current credit card bonuses from both airlines while they’re still around.

That said, if you already have a US Airways card and need to wait a while before applying again, you could consider getting a Citi American Airlines card since offers on the Platinum Select Visa, the Citi Select Amex and the CitiBusiness are all up to 50,000 miles when you spend $3,000 in 3 months at the moment. These links are “unofficial”, but many people have reported getting in on them in this Flyertalk thread, but I can’t personally vouch since it has been over a year since I’ve gotten one.

That way, you’re potentially doubling your sources of bonus miles for if or when a merger of the Dividend Miles and AAdvantage programs does take place.

Positive or Negative?

Although I think competition in the airline marketplace is great for the consumer, I do think that several positive things could come out of a merger between US Airways and American. American is set to get a fleet of new planes over the coming years, and this move would inject the new company with the cash to keep those planes flying to American’s extensive route network while expanding US Airways’ reach.

I love using US Airways miles for Star Alliance awards like I recently did on my trip to South Africa, but I appreciate the flexibility of being able to book one-way award using American miles even more, and I love some of American’s Oneworld partners like BA and Cathay, so there would still be great ways to put those miles to use.

At the end of the day, I wouldn’t make a lot of decisions based on a merger at this time, because even if happens, will take a while till we know what the details are, so I’m going to operate as though it will be business as usual for a while to come.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Previous post:

Next post:

  • FlavCity

    thoughts on getting a few barclays us air cards..and holding the miles until u can transfer to AA??

  • thepointsguy

    I think the offer is good enough on those cards that even if the merger doesn’t end up happening, the miles will be valuable, so I don’t see much risk in doing that. I wouldn’t get it if the ONLY reason is for them to eventually become AA miles, because the merger may not happen

  • A. S.

    Thanks for a very well-balanced and thought out guess of what might happen — I agree with most, if not all of it. My biggest fear, as an AA flyer of many, many years, is that Doug Parker bring with him his “cost-cutting” culture. There’s a reason US’ ticker symbol is LCC! (actually, that’s probably just a coincidence…) But seriously, don’t you think that things like AA’s domestic First meals and even some parts of the premium international service will suffer cuts? I also fear for the SWUs, which I have a hunch will eventually require certain minimum fare classes. Things like that, which go counter to AA’s incredible push to position itself as a no-holds-barred premium airline even by international standards. What’s the point of having great hardware if we go back to having surly and miserly service?

  • Jeremy

    I’m considering doing that too. Only concern is I recently did a mini AOR (my first true one) and got the Priority Club Visa, Ink Plus, Club Carlson, AMEX Hilton (free), and AMEX Gold Business cards between mid December and late January. You think it’s safe to apply for Barclays US card? I’d imagine that as soon as a merger is announced or shortly afterwards, they’ll stop offering that card.

  • Blitkin

    My status is with UAL this will hurt because US Air was my backup where I could still earn miles toward status. Without them there may be a few worthless flights this year.

  • FlavCity

    Should be safe, and u’ve prob never had a barclays card b4? worst case, u get rejected..it happens to everyone once in a while ;o

  • Leonardr

    As a USAir Chairman (for many years) who travels worldwide, I rely on having the variety of international partners via Star Alliance. A switch to OneWorld would be the thing that has me leave USAir. I really hope if they merge they stay with SA…

  • Sam

    I disagree that they will stop offering the US Airways card right after the merger is announced. They will keep trying to bring in new cardmembers for as long as they can and then convert them all to another product a year or more later when the merger is completed (assuming that Citi retains the credit cards rights for the combined airline). This is how it happened with US Bank when northwest merged and also in the UA merger (continental cards were offered for at least a year after the merger was announced and only converted after the merger was complete).

  • Mipo777

    I got the Barclays card this month anticipating this sort of thing. I’ve heard that its one of the few remaining “churnable” cards remaining. Can someone speak to how soon I might be able to get another one & if I need to cancel the old one first?
    Thanks

  • Greg

    From my understanding of US Airways, I think American Airline frequent flyers will leave the program in droves.

    As an Executive Platinum member with AA, I enjoy the upgrades on lower fares, and the frequency of upgrades. I think it is rare that a 100,000 mile international flyer with AA would sit in coach – with US I think that is a different story.

    On the domestic flights I have done with US, they did not even have hot meals in first class – in fact they only had snacks in first. I really wonder why US even has a domestic first class product, and hope that a merged AA/US won’t lead to a removal of the domestic first class product.

    I would add to your prediction TWO big changes to the new US/AA program.
    - reduced First domestic service
    - reduction in award availability

  • Dieuwer

    Thought on the relationship with Alaska Air? Will you still be able to accrue miles with AS Mileage Plan flying AA/US?

  • Leonardr

    Int’l upgrades on US is definitely possible but could use some serious improvement – this is part of the “you can’t use miles for just one way” problem that US has.

    I don’t know what flights you’ve flown domestically, but at least for cross-country, there is always a hot meal (and two choices – one being vegetarian). I quite enjoy the automatic upgrades that US provides for domestic – wish they did it for int’l too (even for a fee!!). Having my 1st class upgrade ready a week in advance is a good feeling.

    Merging the airlines, in general, is going to lead to a huge reduction in award availability because you now have twice as many folks at all levels (esp. the higher ones). And I agree, it’s a big concern of mine as well. It’s one reason I stopped picking up miles also on UA when they merged with Continental – too much competition.

  • G_man

    CLT has some of the cheapest landing fees of any hub – do you think they will instead use Dallas, Miami, or Philly for their east coast domestic hub?

  • tassojunior

    US’s credit card will very soon switch to Citi, just as AirTran’s switched to Chase.

    US’s international flights go from Charlotte and Philadelphia. They’d be especially dumb to give up international routes.

    Doug Parker of Air West fame will run AA like he did US. That is: Air West flying under a new name.

    They have the new logo already on the tail of planes.

    DCA is a mini-hub for US. Little AA presence currently.

  • Michael

    Hi, am I missing something? The link to the US Airways Chairman’s Preferred Premier World Mastercard is restricted to Chairman level only (100,000 miles). So unless you’re already a top tier frequent flyer with US Airways, I don’t think you can apply for this card…

  • jmw2323

    any idea how long since closing US account to apply again?

  • jmw2323

    hard to imagine AA leaving the family they started. I guess stranger things have happened.

  • jmw2323

    there are other versions that max out at 50k after balance transfer. The photo example posted above was taken right from TPG’s account

  • Scottlanders

    What do u think will happen to AA’s business/ first partner awards such as Japan and Cathay. Will there be less availability, and more miles required? Will they adopt the US air policy of no changes once travel begins?

  • http://twitter.com/Goat__Rodeo Goat Rodeo

    Funny – I applied for 2 citi AA cards and a us airway card today….

    I’m curious on what happens to them once they move the brands together long term…. seems to me that the Citi/Barklay’s relationship would need to be one or the other….

    Anyone know what happened to the branded cards with the other merger?

  • http://twitter.com/Goat__Rodeo Goat Rodeo

    I dont get this… you’re going to have “twice the folks” but also twice the flights and twice the routes. As a percentage, the elites should still (statistically) be about the same percentage of fliers.

    Am I missing something?

  • ntd

    Might it make sense to buy up to Chairman’s Preferred now in the hopes of conversion to Executive Platinum later this year?

  • Pjbrunk

    You don’t know what you are talking about when you speak of the UACO merger. Clearly you are not a frequent flier or even close to a road warrior, and you need to do more research next time before making statements like “it can be argued that the combined program captured some of the best aspects of both programs”. Sure you can argue anything, but your statement has zero basis in reality. Ask a Million Miler if the airline kept its promises to current million milers. Ask a 1K flier if upgrades clear like they did before. Ask a Silver elite if they can book extra legroom at booking like they used to be able to.

  • Schmenge

    American Airways.

  • Schmendrake

    $350 co-pay and 25K miles

  • Lantean

    So you never got into trouble for using US Air multiplier and then canceling the ticket? Interesting…

  • NeVoL

    In my experience, I had the card last Sept. and again in late December without closing the 1st account. I’ve read a post in some other blog that Barclay can approve you with 2-3 cards on the same day.
    Currently, I have 2 US Airways Premier World MasterCards. With my last US Air card, I also applied for 2 more Barclay cards on the same day namely: Frontier and Priceline w/c generated one hard inquiry.
    For what it’s worth, I used my 1st US Airways card extensively and paid the balance off. I guess I earned Barclay’s trust and rewarded me with instant approval.
    Again, YMMV. Good luck!

  • Michael

    Both the link and screen shot indicate you _must_ be Chairman level in order to apply. (“Chairman” level is the top tier frequent flyer with US Air.) So it doesn’t look like this offer is available to the unwashed masses. Not sure what the general card offer is; probably a 5,000 bonus after a $10,000 spend requirement…

  • Brett

    A four-tier FFP does not fit well in a OneWorld context. And what of AA’s Lifetime status elite flyers. Better be real careful you don’t marginalise these folks and reduce their benefits under a four-tier system.

  • Federico

    Or US Airlines ;-)

  • Joe R

    Remember US Airways is based on Tempe, AZ. It might not make sense to them to get rid of the Phoenix hub.

  • Sam

    That link has been around for over a year and people have been getting approved, Chairman Preferred or not.

  • Sam

    I would bet on Citi keeping the relationship because the merged carrier will keep the American name and they are the bigger bank. Barclays will convert current US Airways card holders to another product as US Bank did with Northwest Airlines cardholders.

  • Pingback: The “New Double Browser Trick” (AAdvantage + US Airways Cards) - Mommy Points

  • jmw2323

    once again, there are many links out there with 50k max. an easy google search gives you links. Why so negative without spending the 3 seconds it took me to find a link?

    https://www.barclaycardus.com/apply/Landing.action?campaignId=1695&cellNumber=48&referrerid=CF111c042f201314020d08105b546256

  • Garrett

    TPG:
    What do you think of buying up to US Platinum or Chairman’s Preferred now in the hopes of conversion to Executive Platinum later this year?
    (FYI: I am AA Lifetime Platinum)

  • Matt

    I don’t know about the Phoenix or Philly hubs but I don’t see Charlotte going away or even seeing much reduction. It’s presently very profitable for USAirways. Miami makes sense as a Latin American gateway but it’s costs are through the roof. One advantage USAirways brings to the merger is strength on the East Coast that American lacks, I don’t see that being given up in the integration.

  • Marc

    Thoughts on headquarters? Stay in Dallas?

  • Rob

    Why OneWorld as opposed to Star Alliance? Seems like Star Alliance enjoys a bit more diversification…

  • Schemge

    “…the merger might not happen.” And pigs will soon fly…

  • Pingback: Maximize Monday: Maximizing A Potential American Airlines US Airways Merger | The Points Guy

  • Pingback: Travel Tuesday Top 10: Ways That Elite Status Is Evolving | The Points Guy

  • Mikey

    Interesting. I figured Charlotte stay around….but then again I look at what American did Raleigh in favor of Miami.

  • Jt4066

    After reading a lot of these posts, I see a great response among you of getting a US Airways/Barclays Travel Card for the miles in hopes of a merger with American. Sounds like the US Miles will transfer over to American Miles. Will the US Airways Miles become more valuable when they transfer to AA? What are the benefits of getting a US Airways Travel Card?

  • sal

    Every merger has resulted in flight reductions. I expect the same in AA/US – it will be twice the elites but not twice the flights.

  • sal

    That concerns me too. However, Parker’s “cost-cutting” culture has resulted in US Airways posting profits while American’s “premium airline” strategy landed it in bankruptcy. I would like to have a premium product, but I understand making a profit is far more important because that’s how an airline stays in business.

  • sal

    I think Phoenix, Philly, and Charlotte hubs are safe. Charlotte could see a few reductions but I don’t it being dehubbed. American’s hubs in Los Angeles and New York are far weaker and will most likely be eliminated.

  • Emily

    I currently have a US Airways dividend miles account, since I usually fly out of Philadelphia, which is 75% US Airways. I also have a British Airways Avios account, because BA is what I used to travel to Europe. With this merger, do you think it will be possible to combine all of these miles, since BA is a oneworld alliance member?

  • GG

    US Airways is a Low Cost full service carrier. They had to reduce the frills in order to lower the fares. I am sure when you shop for fares you see the difference

  • Pingback: Recap of US Airways/American Airlines Merger News And Media Appearances | The Points Guy

  • Pingback: How Will the American Airlines / US Airways Merger Impact Your Business Travel?

  • Wahlflower

    Do you suggest applying for both a Delta Card and American Airlines Card in case of the merger or waiting to see?

  • Pingback: American Chooses Citi As Post-Merger Credit Card Issuer; Judge Sends Merger Plan to Vote | The Points Guy

  • Jared B

    I have the same questions…

  • Pingback: A Sneak Peak Inside The New American Airlines Airbus A319, Service Begins September 16, 2013 | The Points Guy

  • Pingback: Top 10 Reasons I Don’t Want A US Airways American Airlines Merger To Go Through | The Points Guy

Print This Page