We thought those animals on the Frontier Airlines livery were just hanging around looking cute. Turns out they were biding their time, plotting. And now they’ve made their move.
That otter definitely looks like the scheming type – Photo: Frontier Airlines
Frontier just announced its planned purchase of fellow ultra-low-cost-carrier Spirit Airlines. The result will be a low-cost juggernaut, ranking fifth in size among America’s airlines. One of our more prescient contributors, Steven Kimball, suggested this merger back in 2016. And from the airlines’ perspective the merger makes a lot of sense.
Obviously there’s the similarity in their approach to bare-fare pricing and bare-bones service. But also the all-Airbus narrowbody fleet, which will definitely contribute to a smoother merger and operational synergies. Both airlines operate the A320neo, and the new combined fleet will boast great fuel efficiency (cramming a ton of passengers into each plane also helps efficiency, I guess).
Image: Spirit Airlines
What’s the upshot for passengers? The airlines are trying to spin this as a positive, with Frontier loyalists getting better access to Spirit’s network in Central and South America, and Spirit-ers gaining more destinations in the western United States. The combined airline’s heft may help it better compete with the big four. At the same time, this means fewer individual airlines within the ULCC segment, which may drive up fares in that part of the market.
Also it’s no sure thing that the government will approve this plan. On one hand, the current administration has expressed a desire to keep inter-airline competition strong, and has been less friendly to mergers and partnerships. On the other hand, the administration is a little more embattled now and may not want to pick this fight. Or they may buy into the two airlines’ argument that a larger fifth player in the market is better for competition overall.
US Airways Airbus A330 and American Airlines Boeing 777. Image from American.
Ever since American Airlines declared bankruptcy in November 2011, Doug Parker from US Airways has been on the prowl to snap up the airline and merge. Talk of a possible merger has remained around the aviation world since then, and in some cases it has been discussed to the ends of the earth. It really shouldn’t have been much of a surprise when news that the two airlines would merge started to leak last night.
The two airlines will combine and create one of the world’s largest airlines. The combined entity will lose the US Airways name and will become a member of oneworld. The ’œNew American Airlines’ will strengthen oneworld with a combined network of 336 locations in 56 countries offering 6700 daily flights.
’œToday, we are proud to launch the new American Airlines ’“ a premier global carrier well equipped to compete and win against the best in the world,’ said Tom Horton, Chairman, President, and Chief Executive Officer of American Airlines. ’œTogether, we will be even better positioned to deliver for all of our stakeholders, including our customers, people, investors, partners, and the many communities we serve.”
The New Merging Couple, US Airways and the New American Airlines Liver – Image: American Airlines
What does this mean for the traveling public? The two airlines will continue to operate separately for quite sometime and it might be a while before most passengers see any real changes. But here is the basic run down:
- The US Airways brand will be transitioned to the new unveiled American Airlines brand and look.
- The head quarters of the new American will be located in Dallas Fort-Worth.
- All hubs will remain in the combined operation: Dallas, Miami, JFK, Philadelphia, Phoenix, Chicago, Charlotte, Washington D.C. (National) & Los Angeles.
- US Airways will leave Star Alliance and the new combined airline will continue with oneworld
- American CEO Tom Horton will continue to be to the chairman — for now.
- US Airways Dividend Miles will no longer exist and will be merged into AAdvantage (but as to when this still has not been announced).
- They will continue to grow the combined airline taking delivery of over 600 new aircraft (including Boeing 777-300ERs & 737-800, Airbus A350s, A320 & A321 NEOs) and retiring the older aircraft (ie MD-80’s).
How will this livery look on an Airbus A330? Image from American.
The new airline does not expect many jobs will be lost due to the two airlines not having much overlap. ’œWe’re not anticipating any major layoffs,’ said US Airways CEO Doug Parker according to the Airline Biz Blog. ’œThe airline will be based in Dallas-Fort Worth and some people won’t want to move from Phoenix [US Airways is based there]. Most of this well take care of itself.’
When the Airline Biz Blog asked the airline CEOs about their regional counterparts (American Eagle and US Airways Express), they explained that they want to concentrate on the mainline before looking at the regional carriers. ’œWe’ll keep them as part of the larger airline,” Parker explained. “It’s one of those things we’ll have to work on over time, but certainly there’s nothing to announce.’ Horton was asked about the possibility of the regional carriers being spun off and responded, “We’ll keep them as part of the larger airline. It’s one of those things we’ll have to work on over time, but certainly there’s nothing to announce.”
With an on-board premium product that is already similar (US Airways Envoy class uses the same seats that the New American airlines does on their 777-300ER) and with a modern fleet, we can hope that this will be a positive match. It is likely that AA/US do not plan to experience some of the same issues that plagued the United/Continental merger and as long as everything goes smoothly, the new American will be official once it clears bankruptcy court in the 3rd Quarter of 2013.
MORE AMERICAN AIRLINES / US AIRWAYS MERGER STUFF:
Story written by Malcolm Muir and David Parker Brown