Inquirer Editorial: Questions fly in merger's face

US Airways and American want to tie the knot.
US Airways and American want to tie the knot. (TOM FOX / Dallas Morning News)
Posted: February 20, 2013

Just as air travel makes the world seem smaller, the airline industry itself continues to shrink - at least, in terms of the number of carriers with logos emblazoned on commercial jets.

After four airline consolidations over the last five years, the Philadelphia region now faces the loss of its most familiar service through the planned merger of US Airways and American Airlines. At some point over the next two years, American Airlines' red-white-and-blue bird insignia will replace the US Airways flag.

For travelers, city officials, and business and civic boosters, the key question posed by the merger will be its potential impact on how Philadelphia International Airport operates and on airfares for domestic trips and abroad.

Early indications - in particular, the welcome assurances given by Doug Parker, the designated chief of the new American Airlines - are encouraging on both fronts. While there are legitimate concerns about a merger that will create so large an airline, there is no obvious red flag yet. Meanwhile, those concerns will be addressed as the $11 billion deal begins to wend its way through the remaining investor, court, and government approval process.

From travelers' perspective, it's a hopeful sign that industry analysts expect regulators to approve the corporate marriage. The experts base that view on the fact that - from the standpoint of competition - the merger will consolidate control over only about a dozen routes where US Airways and American offer similar service.

If the merger produces the predicted $1 billion in annual savings through downsizing and other efficiencies - without costing many jobs at Philadelphia International, as it is hoped - American also could be in a stronger position to compete on fares in markets like this region.

With new competition from carriers such as Jet Blue, soon to launch Philadelphia service, the outlook for domestic fares could be that they follow the relatively stable trends seen in recent years.

As for flights, there's no reason to think the American merger with US Airways will diverge from what occurred with the other four airline mergers: Service was not cut along most routes. But local airport officials are wise to consider the possibility that American might trim Philadelphia's hub status, given that it would be one of nine hubs under the new arrangement.

Parker, who now serves as US Airways' chief, has gone on record saying that Philadelphia will be "an enormous part of the new airline." There are further grounds for optimism in the industry view that Philadelphia will have to be retained as a key hub in order to compete effectively with United Continental's fights out of Newark.

No doubt, Mayor Nutter's administration will want to track the merger's progress and its potential impact closely. It's even more important, as well, that the city-owned airport move ahead with its ongoing improvement program to strengthen its partnership with the newest corporate player in aviation.

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