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What an American-US Air Merger Means for Consumers

And then there were three.

American Airlines and U.S. Airways have made it official: they’re tying the knot. The merger, still pending the federal green light, will create the nation’s largest airline. The new American Airlines will employ more than 94,000 people, fly more than 950 planes and operate more than 6,500 flights per day. More information about the merger can be found on American's website.

The number of so-called larger, legacy carriers is now three: United, Delta and American.

From a fiscal standpoint, this makes sense for the players involved: figures put the annual boost in savings and investments at about a billion dollars.

But what can the consumer expect?

This is the fifth major airline merger in the U.S. since 2001, when American acquired TWA. And three major concerns always pop up.

Increased airfare: If you pluck a player off the field, it makes it easier for those that remain to hike fares and pass new fees.  Domestic airfare in 2013 is already projected to be approximately 5% higher than in 2012, so reduced competition between legacy carriers could mean higher fares.

Reduced availability: Overlapping routes between merging airlines might be slashed, leading not just to reduced competition and the potential for higher fares, but also the diminished convenience that comes with fewer flights and flight times to choose from. That said, airlines have already been aggressive about reducing capacity, which has led to fewer seats overall and fuller planes in the sky.

Customer service issues: Especially on the short term, things like long wait times on reservations lines, computer glitches and scheduling snafus can be par for the course when airlines merge.

But let’s not forget that air travel can continue to be an attractive value option, especially in an era where consumers are increasingly savvy.  Keep these points in mind:

The airfare sale will never go away: Airlines will always depend on sales to promote specific routes and to fill seats on last-minute flights and during slower travel periods. Seasonality, in fact, will always drive the price of your flight.  So, the flexible traveler can still find airfare bargains, especially if they know to look for the newest sales on Tuesday afternoons (and on the Travelzoo Top 20 every Wednesday morning).

Minimal overlap: One thing that’s unique about this merger, at least when compared with the recent United-Continental and Delta-Northwest unions, is that there are far fewer overlapping routes, minimizing the chance that many popular regional routes would be slashed.

Competition may turn more regional: The new American Airlines will have better reach in two main regions: the Northeast and the Southwest, thanks to its acquisition of already existing U.S. Airways routes. Also, business travelers may benefit from a stronger network of airports up and down the eastern seaboard, with American’s positions in New York and Miami joining U.S. Airways critical operations in Charlotte, Philadelphia and Washington’s Reagan National Airport, plus the lucrative shuttle routes between New York, Boston & D.C.

Competition from others: The popular low-cost carriers aren’t going anywhere. In fact, a legacy carrier merger might help make the no-frills players even more relevant, creating marketing opportunities for airlines like JetBlue, Virgin America, Southwest and Frontier.

So while the skies may be less crowded, let’s not assume -- at least in the long run -- that they’ll be any less friendly. This is the new normal. The flexible, connected consumer will still find chances to fly, and at prices they can afford.

Gabe Saglie is the Senior Editor at Travelzoo.

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Deal Expert, Los Angeles
Thursday, February 14, 2013
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Gabe Saglie