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Airline mergers not good for passengers – academics

Photo by Jorg Hackemann
Photo by Jorg Hackemann

The consolidation of US airlines may not be a good thing for passengers, two academics have suggested.

In response to the announcement of a planned merger between American Airlines and US Airways, which would create the world’s largest carrier by passenger numbers, Dr Brent Bowen of Purdue University, Indiana, said the trend towards a handful of small “super airlines” dominating the skies was likely to reduce performance levels.

Dr Bowen, along with Wichita State University’s Dr Dean Headley, jointly conducts the annual Airline Quality Rating survey, and he claims that historic research shows that every major airline merger in recent history has led to “significantly declining” standards in terms of performance, including punctuality, lost luggage and employee satisfaction.

“There will be no benefits to performance and consumers will not see better quality,” Dr Bowen said. “Employees of both airlines will be unhappy and destabilised for an extended period.”

According to the Airline Quality Rating, US Airways has consistently outscored American over the past five years. But with American playing the role of the larger partner in the recent merger, Dr Bowen said that US Airways “will not have the ‘heft’ to bring up the performance of the larger company”.

The academics also noted that following the United-Continental merger, the US Department of Transport reported that customer complaints and lost baggage increased.

“Anytime you have two airlines trying to combine, one of those airlines is going to have a period of decline,” Dr Headley said.

Dr. Bowen went further, suggesting that the planned merger of American Airlines and US Airways would create “an oversized bastion of mediocrity that will serve the public in far poorer fashion”.

The US has seen three major airline mergers in the past five years, with Delta Air Lines combining with Northwest in 2008, United Airlines merging with Continental in 2010 and now American joining forces with US Airways. Together these three groups carry approximately 470 million passengers per year. Along with Southwest Airlines, which carries a further 135m, Dr Bowen and Dr Headley said the US airline industry “seems to be headed toward four ‘super airlines’ dominating the market”.

Another US university professor however, has taken a different view. Michael Ball, a University of Maryland expert on transportation systems and airport operations, claimed that robust competition among these four ‘super airlines’ will drive customer service improvements.

“The four strong competitors will generally expand their national footprints, creating greater competition. In addition, as the airlines individually become healthier, they will be able to focus more on improving customer service and providing more innovative services, which should improve the customer experience,” said Ball.

He added however, that airfares could increase in some markets.

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