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A Rundown of Things to Come With The New Post-Merger American Airlines

by on December 9, 2013 · 35 comments

in American, US Airways

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The American Airlines US Airways merger is expected to close this morning, which means we should start to hear definitive information soon about how the new airline will look, when their frequent flyer programs and accounts will begin to merge and what awards, fleets and routes will look like. So I wanted to give a brief rundown of what to expect, and how I think this will all unfold.

The American US Airways news is only the latest in a string of high-profile airline mergers.

Will the merger go smoothly? Only time will tell.

Frequent Flyer Programs

My guess is that we could actually start seeing the ability to shift miles between American AAdvantage and US Airways Dividend mileage accounts before the end of the year. While I do think that’s a bit of a long shot given how long it’s taken other mergers to get to this step, I do think it’s possible, though I think a likelier date is January 7, which COO Scott Kirby suggested would be the date that the airlines plan to take the first steps towards becoming a single airline.

In past mergers, mileage program integration began as early as five months after the merger announcement with reciprocal elite benefits and the ability to combine miles.

With Delta and Northwest, the merger was announced in April 2008, closed in October 2008, and by March 2009, flyers were able to combine their SkyMiles and WorldPerks accounts.

The Delta Northwest merger created the world's largest airline at the time.

It only took 5 months from the Delta/Northwest merger for frequent flyer account combination.

With Continental and United, the process took a lot longer. The two airlines announced their merger in May of 2010 and merger closed in October, about five months later. It wasn’t until May of 2011 that the two started combining some airport functions, and the new airline didn’t announce details of merging the two frequent flyer programs until September 2011.

I think we’ll see it happen a lot faster in the case of American and US Airways and I suspect we’ll be able to transfer miles back and forth between accounts throughout the spring.

My guess is that also because of the timing of the merger, the two airlines are going to allow flyers to combine their elite miles earned from this year on both airlines to put toward elite status in 2014 just to keep people happy and the merger on track without too many strident consumer complaints.

The two should also let flyers combine their Million Miler accounts from both airlines and that any Million Milers who already have status should retain their status without incident.

Flyers should be able to combine million miler status from both airlines.

Flyers should be able to combine million miler status from both airlines.

Awards

A merger also means the almost-certain disappearance of US Airways’ famous award chart “sweet spots” that include flying to North Asia (including Hong Kong and Taiwan) in business class for just 90,000 miles, or the South Pacific (including Australia and New Zealand) or South Africa for just 110,000 miles.  Instead, flyers will likely be stuck at American’s higher levels of 100-110,000 to Asia, 125,000 miles to the South Pacific and a huge 150,000 miles to Africa (and chances are you’d have to transit through London and pay huge taxes and fuel surcharges on top of it!) – that is, if the airline doesn’t jump on the devaluation train after the merger and hike up its award pricing as Delta and United have done recently.

North Asia including Hong Kong prices out at 90,000 miles instead of 110,000 to Southeast Asia.

Book those high-value US Airways awards sooner rather than later!

The absolute end date should be March 1, when US Airways is slated to exit Star Alliance completely by March 1, 2014. But several readers as well as FlyerTalkers have reported having trouble booking Star Alliance awards they’ve found on other sites like United.com and ANA when calling US Airways, so I expect award availability to start dwindling dramatically and then to disappear altogether by March 1.

Logistics

The reality is, though the merger will go through, the two airlines are going to operate pretty much separately for a while to come, and it’s going to be a while before we see even the first steps towards integration.

This merger will be a bit different from past ones because Delta and Northwest, and Continental and United were already in the same alliances before their mergers.

For that reason, I don’t think we’ll see the integration of reciprocal upgrades or alliance elite benefit nearly as soon as we did in those mergers since it’s bound to be a messier process, but I could be wrong. The two airlines themselves could begin offering reciprocal elite benefits a lot sooner, though.

American Airlines Elite Status Benefits

The airlines might start offering reciprocal elite benefits long before combining frequent flyer programs.

Then in terms of physical aspects – they’ll probably start painting all the planes in the new American livery, but that’s bound to take a couple years, so I think we’ll see a mix-and-match fleet for a while yet.

It'll be a while before we see the new livery across the fleet.

It’ll be a while before we see the new livery across the fleet.

One other major sticking point I see is in-flight service, where there are huge discrepancies between the airlines. US Airways is notorious for being stingy with food and beverage service and being behind the times on things like installing in-flight WiFi on its aging fleet, while American has been making a major (and mostly successful) push to update its fleet and its service culture.

That’s bound to end because the man behind many of these changes, Virasb Vahidi, the Chief Commercial Officer, is being let go and replaced with his counterpart from US Airways, which says to me that American’s service culture and recent improvements are going to be superseded by the inferior values and service of US Airways. Even though officials from the airlines have said the merger will enhance both airlines’ services, I find that hard to believe with the new airline sticking with US Airways’ CEO and head of product, and I think we’ll see them resorting to US Airways’ cost-cutting measures.

That will even translate to things like beverage and meal policies. Right now, American Airlines offers meals in first class on flights over 2 hours that operate within traditional breakfast, lunch and dinner times. On flights greater than 2.5 hours that fall outside of a traditional meal time, a snack service will be provided. However, on US Airways, your flight must be over 3.5 hours to get a meal in first class, otherwise it’s just a basic or enhanced snack basket depending on flight time.

US Airways offers a meal on board flights greater then 3.5 hours.

US Airways only offers a meal on board flights greater then 3.5 hours.

Hopefully we’ll see WiFi access on almost all domestic flights. Right now, American Airlines’ WiFi in the Sky domestic service offers Gogo-powered connections on all 767-200 and 737 aircraft as well as most MD80 and 757 aircraft. The airline announced plans to enhance its fleet with new narrow-body A319, A321 and 737-800 aircraft outfitted with inflight WiFi in early 2012, and it pledges to continue expanding the service to its existing narrow-body aircraft in the future. The airline has also installed it on its new 777-300ER’s, which fly internationally on routes like LAX-LHR and JFK-GRU.

Want WiFi on your flight? Not if you're flying one of US Airways' old planes.

Want WiFi on your flight? Not if you’re flying one of US Airways’ old planes.

US Airways has also upped its WiFi availability lately. The airline offers Gogo on nearly 90% of their flights traveling over the continental United States including on all Airbus A321, A320 and A319 aircraft and Embraer 190, 170 and 175 aircraft.

American 777-300 Business Class.

I’d love to see American’s new business class across the international fleet.

Speaking of which, the two airlines will have to standardize their seating products over next couple of years as well, but will probably be a long time, and before that comes to fruition, we’ll already see them beginning to mingle different aircraft on different routes. Mainline service on some routes downgraded to older planes, or vice versa. I don’t think we’ll see any downgrades on those lucrative transcontinental routes – I think the real losers will be expensive regional flights where there’s not much competition and where the new airline can shift clunkers from both fleets without too many repercussions on its bottom line.

US Airways' Envoy Suite is among the top premium products offered by US airlines.

US Airways’ Envoy Suite is also a good option – hopefully the entire long-haul fleet will be updated.

Internationally, I’d love to see the new airline adopt either US Airways’ Envoy Suite or the new American business class seat from the 777-300ER on all flights, but that’s also likely way down the road once the two fleets start integrating in a major way.

Routes

Speaking of routes, the airlines only overlap on 12 routes, and 130 cities served by American but not US Airways and 62 cities served by US Airways but not American would be available to flyers of both once the merger goes through.

The new airline should combine most domestic routes with some exception per the DOJ settlement.

The new airline should combine most domestic routes with some exception per the DOJ settlement.

However, under the terms of the settlement, the airlines will divest 52 slot pairs at Washington Reagan National Airport (DCA) and 17 slot pairs at New York LaGuardia Airport (LGA), as well as certain gates and related facilities to support service at those airports. Each slot pair entitles the holder to one departure and arrival.

The airlines also will divest two gates and related support facilities at each of Boston Logan International Airport, Chicago O’Hare International Airport, Dallas Love Field, Los Angeles International Airport, and Miami International Airport.

After completion of the required divestitures, the combined company expects to operate 44 fewer daily departures at DCA and 12 fewer daily departures at LGA than the approximately 290 daily DCA departures and 175 daily LGA departures that American and US Airways operate today.  Each is a departure and arrival.

So flyers out of LaGuardia and DCA will likely be affected most while those in other hubs will likely continue flying the same product they’ve been in so far.

Hubs

The new American has agreed to maintain its hubs in Charlotte, New York (Kennedy), Dallas, Los Angeles, Miami, Chicago (O’Hare), Philadelphia, and Phoenix consistent with historical operations for a period of three years. After that, however, I think we could see some big shifts.

For instance, is Phoenix really going to be a hub with Dallas and LA buffering it in either direction? For that matter, will Philadelphia continue to operate as it does currently with Charlotte being such a profitable hub and American operating much of its fleet out of Chicago, New York and Miami? Only time will tell.

The Big Picture

Although the merger is going to go through any minute now, the most major, imminent changes we’ll see for the time being have to do with the frequent flyer programs and their award charts. I would strongly suggest any of you with US Airways miles who have been waiting to book Star Alliance awards do so as soon as possible while US Airways’ current award chart is still in place and awards are still available. You might have a small window of opportunity if you want to shift American miles to US Airways to book Star Alliance awards if the airlines permit that before US Airways’ exit from the alliance, but I wouldn’t bank on it.

Beyond that, I think we’ll start to see more major integration of the two airlines mid to late next year and only time will tell if it goes more smoothly than the mergers of Delta/Northwest and Continental/United, both of which involved some major culture clashes between the airlines and a lot of customer service headaches for flyers.

I don’t think it’s all bad news, especially for elite flyers who will start getting benefits on both airlines before too long, as well as the general flying public who will be able to earn and redeem miles on both airlines by early spring, but as with any major merger like this, I predict there will be a lot of hiccups and new information leaking out, so stay tuned for further developments.

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  • David

    Do you anticipate the US Airways card will see an increased sign-up bonus in the next few months? Barclays needs to get rid of all those excess miles, right?

  • michaelspain

    Brian, great article! Are there any credit cards with US Airways mileage incentives we could get now, then shift to AA once that becomes available?

  • Jeff

    Brian,If you have a US Air card will they cancel it and issue you a AA Card? I am asking because I want to get any sign-up bonus on the AA card and don’t want to miss it if they cancel by US Air and reissue an AA card.

  • Curtis

    Left off Dallas on the list of hubs again.

  • Max

    What will happen with my US Airways Dividend Miles?
    I can deal with an increase on award cost, however, I don’t have the time at the moment to fly off my bonus miles.
    Do they expire before their regular date? Will they just convert?

  • dbl_k

    Do you think US Airways will have another buy or share miles promotion? Or is that a thing of the past?

  • Stompey5

    When do you think we can book US flights with AA miles (or using BA Avios)? Waiting to try and get BOS-DCA Avios sweet spot!

  • anyaerp

    I was thinking the same thing. There is one offer for 40,000 miles but has an $85 fee. But if those miles will turn into AA miles later it is worth it I think….

  • thepointsguy

    You’ll be able to use Avios on US/AA routes March 2ish

  • Daniel

    NICE GESTURE
    “Hero Miles at AA.com

    December 9, 2013 – Rick

    My buddy Brian, The Points Guy made a huge gesture this holiday season by donating 1 million miles to American Airlines HeroMiles program. He earned those miles on a buying spree from Ebags, when they were offering a huge number of miles per dollar spent through the AA Shopping Mall. Read more about it here .”

  • thepointsguy

    They may sneak one more in!

  • thepointsguy

    They will become AA miles at some point

  • thepointsguy

    Don’t know why that happened..but fixed

  • thepointsguy

    TBD.. I don’t think the US Airways BArclays cards will be changing anytime soon.. but at a certain point they may if/when Citi becomes the sole issuer

  • thepointsguy

    Potentially..though the Barclays cards may not go away quickly.. have to wait and see

  • Heather L. Cannady

    Unrelated but did you pick the instagram Marriott winner yet?

  • Darren

    Will we be able to use AA gift cards to purchase US Airways tickets now? And vice versa?

  • Doug

    Any new thoughts on purchasing US Chairman status prior to the merger being completed? For ~$1500 as a Gold it seems to be worth it for the benefits and possible AA upgrades

  • dieuwer

    Why would you use Avios for BOS-DCA??

  • Stompey5

    Prices have been ridiculous – Even right now for 3 months out they are $189 for Y – @ 9000 avios r/t that’s 2.1 cpm

  • Chris Robins

    Brian, do you have a sense of what impact US Airways leaving Star Alliance will have on award availability for other Star Alliance members? Will Star Alliance partners redistribute seat allotments for US Airways amongst the remaining members or will they keep them the same.

  • GreenHawkIA

    I think your paragraph on the WiFi is a little off. As a frequent domestic flyer with US, I find their WiFi penetration quite good. I find I’m much more likely to be on a non-WiFi AA MD80 or non-WiFi American Eagle flight than I am to go without on a US flight. Last news I saw on it was that 90% of US flights have WiFi, including all Airbus A319, A320, A321 and Embraer 190 aircraft. That is the bulk of the US fleet – and doesn’t include the Republic flights that have WiFi.

    For more:

    http://www.prnewswire.com/news-releases/us-airways-expands-gogo-in-flight-internet-access-to-90-percent-of-domestic-flights-215057541.html

  • Tony

    Where do you get your info on the merger?

    1) Meal Service will mirror AA, starting March 1st, on all US operated flights.
    2) FF program will have three levels, not four like US AIr and yes, the sweet spot in the US mile chart will do away. But we have until March to take advantage of those sweet spot, and I’m sorry to say that the AA folks wont be able to take advantage of it.

  • jay

    TPG, Do you think it’s possible to mix between star alliance and one world for award trip before 3/1? I have an award ticket reserved, but it’d be quite convenient if I can change the first leg to AA (which allows me to use a much closer airport).

  • Tony

    Also you wrote, “US Airways’ WiFi access is much more limited, although all Airbus A321 aircraft are equipped with Gogo WiFi, and the service is currently expanding to the Embraer 190, 170 and 175 aircraft. So you’re going to have to check your aircraft carefully to determine whether you’ll be connected on your flights.”

    wrong, ALL mainline aircraft have wifi which has been this way for some time.

  • GreenHawkIA

    As I say below, not quite all. There are still some old East 737s beating around out there. No WiFi and not much else other than wings.

  • shay peleg

    Do it

  • Patrick Beard

    $85 fee is waived the first year. If I didn’t already have the card, I would apply now and cancel before the end of the 12 months.

  • http://www.CheersandGears.com Oldsmoboi

    I have the barclay card now and I do the $25k spend each year to get the bonus qualifying miles. Should I go for the Citicard now too?

  • dieuwer

    Should wait for it to come down to $150 round trip. That is what I do as I fly this route for work.

  • Chris

    Any thoughts on whether we should buy US Airways status to be converted over to equivalent American Airlines status?

  • Marvin

    I have the same question with a twist. I’m lifetime gold on aa. I am just a few legs shy of silver on us air this year (for 2014 status). Any thoughts on should I just buy silver or let it roll that the gold from American will transfer to us air soon? Thx.

  • anyaerp

    Patrick – the only offer I see does NOT waive the fee. Found via http://www.usairways.com home page. Do you know of another one? It is only 30k (since I have no mileage balance to transfer to get the add’l 10k). Pretty low amount BUT if it means I get extra AA miles that is great. because I already have all the AA credit cards.

  • Tony

    OK 98% of US Airways fleet has WiFi

  • Jules

    Opinion needed: I am currently 1K on United (fly 120,000+ miles/ year domestic). I am based in Philadelphia and do most of my work in Houston. I chose United over USAirways originally because USAirways generally stinks. Now that they are merging, do you recommend me switching to American (assuming I will be Executive Platinum)?

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