U.S. Airways-American Merger to Spur Robust Competition, Better Customer Service: UMD Expert

Thu Feb 14, 2013 12:24pm EST

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COLLEGE PARK, Md.  -- Improved customer service driven by robust competition
lies ahead of the new U.S. Airways-American Airlines merger, says  Michael Ball,
a  University of Maryland  expert on transportation systems and airport
operations.

(Ball co-directs NEXTOR, the National Center of Excellence for Aviation
Operations Research. He oversees the Collaborative Decision Making research
project for the center, which is funded by the FAA, NASA and other airline
industry members.)

The move creates the world's largest carrier in a market dominated by four
airlines. "The merger is a natural, almost inevitable evolution of the U.S.
airline industry. The newly combined carrier, together with Delta, United and
Southwest, will represent a strong group of competitors - each having a robust
national footprint," says Ball, associate dean for faculty and research and
Dean's Chair in Management Science in UMD's  Robert H. Smith School  of
Business.  

Fares could increase in a limited number of markets due to reduced competition.
But overall, and especially long-term, the merger will be advantageous for
passengers, Ball says. "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."

Look for consolidated service and fewer flights in some markets, such as
Charlotte-LaGuardia, he adds. "This is consistent with the impact of previous
mergers and generally should be viewed as positive, reducing overall congestion
and delays."

Ball also projects realignment of the combined U.S. Airways-American network,
including some consolidation of the existing  Dallas  and  Phoenix  hub
operations. "Most likely operations will be reduced at  Phoenix  with some
potential increase in  Dallas. No doubt there will be some rethinking of the
combined strategy at  Philadelphia  and (New York) Kennedy, especially service
to  Europe  with associated connections," he says. "The eventual outcome is hard
to predict, but certainly changes will take place."

While the combined U.S. Airways-American corporation has potential to be much
stronger than the two as individual carriers, Ball cautions "a successful merger
is by no means an easy task."

He says each airline today has different union representation, different sets of
policies and procedures, different fleet characteristics and different
operational control and planning systems. "A high degree of care and flexibility
on the part of management and employees and investment of time and resources
will be necessary. While it is unlikely that poor performance in these areas
would derail the merger, it is certainly possible to induce a very long lag
before a strong and robust combined airline would emerge."

Ball can be contacted at  301-405-2227 or mball@rhsmith.umd.edu .

/PRNewswire-USNewswire --  Feb. 14, 2013  /

SOURCE   Robert H. Smith School  of Business

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