Analysts weigh effects of possible US Airways, AmWest merger - East Valley Tribune: Business

Analysts weigh effects of possible US Airways, AmWest merger

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Posted: Tuesday, May 3, 2005 6:21 am | Updated: 8:32 am, Fri Oct 7, 2011.

If America West Airlines and US Airways merge, the new carrier would give Valley customers better frequent flier benefits and access to an extensive worldwide route network with plenty of nonstop flights connecting the nation’s coasts, industry watchers said Monday.

But if the corporate cultures clash and submarine the partnership, it’s possible Valley residents could lose their hometown airline, analysts said.

"If it’s successful and can operate smoothly and well, it’s good for passengers," said David Stempler, president of Air Travelers Association, a passenger advocacy group. "It will give both nonstop and connecting service to more passengers on the same airline, which is what passengers tend to like. It just expands the service reach for both airlines.

"But our fear is this consolidation will work as successfully as the previous US Airways mergers, every one of which was basically a failure."

The two airlines are in merger talks, but no decision has been reached. Arlington, Va.-based US Airways, the nation’s seventh largest airline, is looking for equity to emerge from its second bankruptcy in two years. Low-cost, Tempe-based America West is the nation’s eighth largest airline, and a partnership with US Airways would unseat rival Southwest Airlines for sixth place.

Tim Winship, editor and publisher of www.frequentflier.com, said the two carriers’ frequent flier programs would benefit from a marriage.

"I would expect this to be a plus at the end of the day," he said. "What I would envision happening is the US Air program would essentially be the surviving program . . . because it has . . . a link to one of the major global alliances, namely the Star Alliance, which brings a whole laundry list of partners to the program both for earning (miles) and redemption. Bigger is always better from a frequent flier standpoint, all things being equal, because it just gives you that many more options."

The Star Alliance is an international network of 16 airlines, including United Airlines, Lufthansa and Air Canada. It is the largest of three global alliances.

Terry Trippler, CEO of www.farefacts.com, said the merger would be good for East Valley consumers, who could take advantage of US Airways’ hubs, particularly in Philadelphia, where the operation is used as a gateway to Europe.

"It will give them more options out of Phoenix, especially to the East, and not just the nonstop runs to the East, but the fact that you could fly possibly from Phoenix to Philadelphia and then all those connections that would be offered once you got to Philadelphia, Washington, D.C., or Charlotte, N.C.," he said.

The merger would combine America West’s strong route network in the West with US Airways’ network in the East, Trippler said.

"It would be unique airline, a low-fare airline that has a lot of routes to Mexico and has some international routes," he said. "You’ve got an airline that would be the first low-cost airline that would really have airport clubs. Both airlines have first-class service and they have an upfront cabin, so that would be good. It would be real hybrid."

Stempler said the merger may possibly take down both airlines. While America West is a solid operation that needs to expand, merging with troubled US Airways and its corporate culture of an expensive legacy carrier is not the way to do it, Stempler said.

"It’s more likely than not that if this went through, there would be more service disruptions, more loss of service for people in Phoenix, Las Vegas, Charlotte and Philly, than there would be positives, because I don’t see how this is really going to work," he said.

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