Airlines' Merger Could Benefit Frequent Fliers
By Keith L. Alexander
Tuesday, April 26, 2005; Page E01
If America West and US Airways merge and create a large low-cost carrier, the deal could be a victory for frequent fliers.
The new airline could present travelers with one of the largest and far-reaching frequent flier programs of any budget carrier, including Southwest, JetBlue and AirTran. It could even have a program that rivals those of some of the largest international carriers, including American, United and Delta Air Lines.
America West's frequent fliers would gain access to US Airways' routes to the Caribbean and numerous East Coast cities. US Airways' business travelers would get opportunities to fly on America West's routes to Mexico and the West Coast.
America West's frequent fliers have the most to gain from a union. Travelers on the merged airline would be able to earn and redeem frequent flier miles on United Airlines, US Airways' code-share partner. US Airways also brings with it access to 15 other foreign airlines through its participation in the Star Alliance network. America West customers could redeem frequent flier miles and use the exclusive airport clubs of such foreign carriers as Asiana Airlines, Scandinavian, Air New Zealand and others.
In the current environment, airlines often match each other's prices and schedules, so the perks of the individual frequent flier clubs often sway business travelers deciding between carriers, said Tim Winship, editor and publisher of Frequentflier.com.
"Business travelers tend to be more invested in frequent flier programs than leisure travelers. This is often the choice between flying Southwest and another major airline," Winship said.
But after a merger, frequent fliers may not see enough of one benefit they crave: upgrades to first class. In their push to cut costs, both carriers have cut back on their use of multi-class, large aircraft and have added single-class regional jets. Competition could be stiff among America West's 4 million or so frequent fliers and US Airways' 5 million frequent fliers for a smaller number of first-class upgrades or free trips.
If a merger occurs, the new airline is expected to fly under the US Airways name, which has broader national recognition than America West. But, to be sure, it is still unclear whether the carriers will unite or come to any agreement at all. Several financial and regulatory hurdles exist. Negotiations could lead to a much less complex relationship involving just a code-share alliance.
Code shares have become common as carriers seek ways to expand their operations without taking on the challenges that come with a complete merger. US Airways and United entered into their code-share agreement in 2002, a year after the government rejected their merger attempt. The relationship allows travelers to earn and redeem frequent flier miles on the partnered carriers.
With hub airports in Phoenix and Las Vegas, America West has a larger percentage of leisure travelers than US Airways, which caters primarily to business travelers flying along the East Coast.
With its strong presence in Las Vegas, America West has one of the largest relationships with hotels in the airline industry. The airline has 57 hotel partners offering frequent flier miles for stays, whereas US Airways has 44. America West also has six of the largest car rental agencies as partners. US Airways has four.
But Randy Petersen, publisher of Inside Flyer, said the biggest advantage US Airways' frequent fliers would get from a merger would be peace of mind. The airline has been plunged into bankruptcy twice in the past two years, raising questions not only about the future of the airline but of frequent flier's accounts.
"These two airlines would do well together, and it's good for members in both programs. But those US Airways frequent fliers would finally be able to stop worrying about the future of their miles," Petersen said.
By Keith L. Alexander
Tuesday, April 26, 2005; Page E01
If America West and US Airways merge and create a large low-cost carrier, the deal could be a victory for frequent fliers.
The new airline could present travelers with one of the largest and far-reaching frequent flier programs of any budget carrier, including Southwest, JetBlue and AirTran. It could even have a program that rivals those of some of the largest international carriers, including American, United and Delta Air Lines.
America West's frequent fliers would gain access to US Airways' routes to the Caribbean and numerous East Coast cities. US Airways' business travelers would get opportunities to fly on America West's routes to Mexico and the West Coast.
America West's frequent fliers have the most to gain from a union. Travelers on the merged airline would be able to earn and redeem frequent flier miles on United Airlines, US Airways' code-share partner. US Airways also brings with it access to 15 other foreign airlines through its participation in the Star Alliance network. America West customers could redeem frequent flier miles and use the exclusive airport clubs of such foreign carriers as Asiana Airlines, Scandinavian, Air New Zealand and others.
In the current environment, airlines often match each other's prices and schedules, so the perks of the individual frequent flier clubs often sway business travelers deciding between carriers, said Tim Winship, editor and publisher of Frequentflier.com.
"Business travelers tend to be more invested in frequent flier programs than leisure travelers. This is often the choice between flying Southwest and another major airline," Winship said.
But after a merger, frequent fliers may not see enough of one benefit they crave: upgrades to first class. In their push to cut costs, both carriers have cut back on their use of multi-class, large aircraft and have added single-class regional jets. Competition could be stiff among America West's 4 million or so frequent fliers and US Airways' 5 million frequent fliers for a smaller number of first-class upgrades or free trips.
If a merger occurs, the new airline is expected to fly under the US Airways name, which has broader national recognition than America West. But, to be sure, it is still unclear whether the carriers will unite or come to any agreement at all. Several financial and regulatory hurdles exist. Negotiations could lead to a much less complex relationship involving just a code-share alliance.
Code shares have become common as carriers seek ways to expand their operations without taking on the challenges that come with a complete merger. US Airways and United entered into their code-share agreement in 2002, a year after the government rejected their merger attempt. The relationship allows travelers to earn and redeem frequent flier miles on the partnered carriers.
With hub airports in Phoenix and Las Vegas, America West has a larger percentage of leisure travelers than US Airways, which caters primarily to business travelers flying along the East Coast.
With its strong presence in Las Vegas, America West has one of the largest relationships with hotels in the airline industry. The airline has 57 hotel partners offering frequent flier miles for stays, whereas US Airways has 44. America West also has six of the largest car rental agencies as partners. US Airways has four.
But Randy Petersen, publisher of Inside Flyer, said the biggest advantage US Airways' frequent fliers would get from a merger would be peace of mind. The airline has been plunged into bankruptcy twice in the past two years, raising questions not only about the future of the airline but of frequent flier's accounts.
"These two airlines would do well together, and it's good for members in both programs. But those US Airways frequent fliers would finally be able to stop worrying about the future of their miles," Petersen said.
