02/14/2013 08:19 am ET Updated Feb 14, 2013

American Airlines, US Airways Merger: What The Airline Deal Means For Consumers

As American Airlines and US Airways announce plans to merge -- a deal that would create the world's largest airline -- passengers are naturally wondering how they'll be affected.

Waves of recent consolidation in the industry have given airline-watchers some basis for prognostication. And, if history is a guide, the newly emboldened American Airlines may get bigger without getting better.

Here's a look at just a few questions that the merger raises.

When will the merger actually happen?

Good question. While the union is being announced on Valentine's Day, it will likely take time for the love between the airlines to blossom. "The integration of the two airlines, with all of the labor, technological and logistical issues to sort out, will undoubtedly take years," writes Dennis Schaal on the travel site Skift. "The stakes are extremely high, as United-Continental’s bumpy track record in their merger highlights," he continues. A statement from AA says "The transaction is expected to close in the third quarter of 2013."

What will the new airline be called?

"The combined airline will retain the iconic American Airlines brand," according to the carriers, "and will be headquartered in Dallas-Fort Worth, with a significant corporate and operational presence in Phoenix."

Just how big will the airline be?

The new airline will have "more than 6,700 daily flights to 336 destinations in 56 countries," the airlines promise, projecting 2013 revenues of $40 billion, serving more than 187 million customers. It's a particularly big win for US Airways, which AP writer Scott Mayerowitz writes "has often been ridiculed within the aviation industry and remains a perennial afterthought among travelers." The AA-US merger, Mayerowitz continues, "will elevate both airlines to the same level as Delta and United. International business travelers will be left with just three mega-airlines to pick from and the merger will likely bring to a close more than 30 years of U.S. airline consolidation."

What happens to AA and US Air frequent flier miles?

That's TBD, at least one mileage expert says. Points professional Brian Kelly told New York Times columnist Joe Sharkey that the programs would likely combine, a move that might give some fliers with a few miles in each program the chance to cash in their markers for a free ticket. The downside is that those tickets may be harder to come by, Kelly says: "After they sit down and work out all of their synergies, the bottom line will be that international capacity and award availability will be cut."

Will fares go up?

It's too early to tell. "Domestic airfare in 2013 is already projected to be approximately 5% higher than in 2012," says Travelzoo's senior editor Gabe Saglie. "Reduced competition between legacy carriers could mean higher fares across the board." Other industry watchers concur. "All-in prices (airfares plus extra fees) will go up," writes Charles Leocha in USA Today. "Services will be reduced -- all for a merger that is unnecessary for the long-term survival of either airline." Other airfare experts are less worried about the potential for higher fares. As George Hobica of Airfarewatchdog writes on HuffPost Travel, "Fares won't increase all that much, if at all. If airlines have learned one thing, it's that people stay home, drive or video-conference if fares go too high. Most air travel is discretionary, not 'must do.'"

Will the airlines lay off staff?

That's unclear. Combined, the airlines employ about 1.2 million people, and the carriers say in a statement that "Employees of the combined airline will benefit from being part of a company with a more competitive and stable financial foundation, which will create greater opportunities over the long term." But the same statement from the airlines later promises that "estimated cost synergies of approximately $150 million are net of the impact of the new labor combined contracts at American Airlines and US Airways." Many of the various labor unions involved have already signed off on the idea of a merger.

What happens if passengers already have tickets for scheduled flights?

Headaches will likely abound, "Especially in the short term," says Travelzoo's Saglie. "Things like long wait times on reservations lines, computer glitches and scheduling snafus can be par for the course when airlines merge," he says. When United merged with Continental, the airlines staged multiple dress rehearsals to make sure their computer systems would work together before making the change. Those steps were taken after US Airways had computer problems during a merger with America West, a process that began in 2005.

The flip side, writes Tracy Stewart at Airfarewatchdog, is a (possibly) more robust travel experience. "You won't be getting steak Diane in the cheap seats any time soon, but how about a full can of Coke and a bag of pretzels?" he says. "Who knows, but minor service improvements along with a little more stability wouldn't hurt. A larger airline is also able to reroute passengers over a larger network when there's a cancellation or delay."

"At this time," the companies say in a statement, "The airlines will operate as two separate carriers flying schedules as they do today. Customers will not see any changes to their existing travel reservations, and can and should continue to book, track and manage flight and travel plans on"

Didn't American Airlines just unveil a new logo? What was that about?

Insider gossip says that the logo and livery redesign were part of a bigger merger-focused play by American. Whatever the reason for the timing -- and the mixed reviews -- the new look will live on post merger as the US Air livery heads into the history books.



American Airlines-US Airways Merger