Merger benefits business travelers
US Airways would offer low fares,
Pittsburgh Business Times
The proposed US Airways/America West merger would create an attractive new option for business travelers looking for both low fares and full-service amenities -- giving the new airline an edge over low-cost giant Southwest Airlines, industry analysts said this week.
A combined US Airways/America West, while continuing as a hub-and-spoke carrier, would feature simplified pricing and lower fares, but also would keep many of the amenities local fliers of Alexandria, Va.-based US Airways have grown accustomed to, including airport clubs, assigned seating and first-class cabin service. The new $10 billion airline, which would operate under the US Airways banner, would serve more than 200 cities, including international destinations.
Other low-cost carriers, including Dallas-based Southwest, do not offer many of these amenities or as many destinations. US Airways currently is Pittsburgh International Airport's dominant carrier and employs roughly 5,000 in the region.
"The combination (of US Airways and America West) is more attractive to business travelers than the companies on a stand-alone basis because the route network is more spread out, and they are maintaining their frequent-flier service, airport clubs and elite travel programs," said Jim Corridore, a logistics and airline industry analyst with the credit rating firm Standard & Poor's.
The new US Airways could help draw business travelers away from other low-cost airlines. Monica Smith, a Dayton, Ohio-based senior consultant with travel and transportation industry consulting group Teradata and a former America West employee, said the new airline likely would provide everything the typical business traveler expects.
Ms. Smith added that America West has been competing with Southwest for a number of years in Phoenix and Las Vegas, so it knows what it is going up against.
"They have a lot of experience going head-to-head with Southwest Airlines," she said. "That's been a big problem for US Airways."
'Challenging competitor
America West has had some trouble in the past attracting business travelers, according to Mr. Corridore. The airline showed a tendency to wait until other airlines had put their fares on sale and started to sell out before it would put its fares on sale, in order to get business travelers flying at the last minute to pay higher fares.
The airline's merger with US Airways, which is navigating its second Chapter 11 filing, still needs the approval of federal regulators, the U.S. Bankruptcy Court, America West's shareholders and the Air Transportation Stabilization Board. US Airways has said it hopes the transaction will be approved by the end of this summer. Until then, it will be business as usual for both airlines, which will maintain separate ticketing, route structures and frequent-flier programs in the interim.
Several local companies said they'll be watching to see what type of airline emerges.
"If they can provide low-cost pricing and full service, then that's a real plus," said Paul Lang, manager of travel services at Bayer Corp., which has its North American headquarters in Robinson Township.
Bayer, which purchases more than 70,000 tickets for employees traveling in the United States each year, currently uses all of the domestic carriers, including US Airways, and it has specific travel agreements with some carriers, whose names Mr. Lang did not disclose.
When selecting a carrier, Mr. Lang said Bayer considers both price and convenience. He said Bayer is taking "a wait-and-see attitude" about the new airline.
"The route structure may change; the fare structure may change," Mr. Lang said.
Kevin Lowery, a spokesman for North Side-based Alcoa Inc., the world's largest aluminum maker, said Alcoa would be open to discussing ways it could work with the new US Airways. Alcoa, which does not currently have any travel agreements with US Airways, encourages employees to purchase the lowest-priced fare, he said.
Whitney Eichinger, a spokeswoman for Southwest, said the airline is accustomed to competition and successfully has competed with America West over the years in some of its key markets, including Phoenix and Las Vegas.
"We see consolidation in the industry as good because of the reduction in the capacity," Ms. Eichinger said. "We will keep costs lower than America West and US Airways. Southwest will continue to offer what we are known for."
US Airways spokesman David Castelveter said the new US Airways will offer low fares -- and more.
"What customers will see is that they will have the first truly global network low-cost, low-fare carrier," Mr. Castelveter said. "It will offer a breadth of service they don't have today."
Keeping costs down and fares low may be one of the merged airline's biggest challenges. Michael Boyd, an Evergreen, Colo.-based airline industry analyst and president of The Boyd Group Inc., said it's unlikely fares will dip much lower than their current levels.
Mr. Corridore added that it will be difficult for US Airways to maintain its hub-and-spoke system while lowering costs.
US Airways would offer low fares,
Pittsburgh Business Times
The proposed US Airways/America West merger would create an attractive new option for business travelers looking for both low fares and full-service amenities -- giving the new airline an edge over low-cost giant Southwest Airlines, industry analysts said this week.
A combined US Airways/America West, while continuing as a hub-and-spoke carrier, would feature simplified pricing and lower fares, but also would keep many of the amenities local fliers of Alexandria, Va.-based US Airways have grown accustomed to, including airport clubs, assigned seating and first-class cabin service. The new $10 billion airline, which would operate under the US Airways banner, would serve more than 200 cities, including international destinations.
Other low-cost carriers, including Dallas-based Southwest, do not offer many of these amenities or as many destinations. US Airways currently is Pittsburgh International Airport's dominant carrier and employs roughly 5,000 in the region.
"The combination (of US Airways and America West) is more attractive to business travelers than the companies on a stand-alone basis because the route network is more spread out, and they are maintaining their frequent-flier service, airport clubs and elite travel programs," said Jim Corridore, a logistics and airline industry analyst with the credit rating firm Standard & Poor's.
The new US Airways could help draw business travelers away from other low-cost airlines. Monica Smith, a Dayton, Ohio-based senior consultant with travel and transportation industry consulting group Teradata and a former America West employee, said the new airline likely would provide everything the typical business traveler expects.
Ms. Smith added that America West has been competing with Southwest for a number of years in Phoenix and Las Vegas, so it knows what it is going up against.
"They have a lot of experience going head-to-head with Southwest Airlines," she said. "That's been a big problem for US Airways."
'Challenging competitor
America West has had some trouble in the past attracting business travelers, according to Mr. Corridore. The airline showed a tendency to wait until other airlines had put their fares on sale and started to sell out before it would put its fares on sale, in order to get business travelers flying at the last minute to pay higher fares.
The airline's merger with US Airways, which is navigating its second Chapter 11 filing, still needs the approval of federal regulators, the U.S. Bankruptcy Court, America West's shareholders and the Air Transportation Stabilization Board. US Airways has said it hopes the transaction will be approved by the end of this summer. Until then, it will be business as usual for both airlines, which will maintain separate ticketing, route structures and frequent-flier programs in the interim.
Several local companies said they'll be watching to see what type of airline emerges.
"If they can provide low-cost pricing and full service, then that's a real plus," said Paul Lang, manager of travel services at Bayer Corp., which has its North American headquarters in Robinson Township.
Bayer, which purchases more than 70,000 tickets for employees traveling in the United States each year, currently uses all of the domestic carriers, including US Airways, and it has specific travel agreements with some carriers, whose names Mr. Lang did not disclose.
When selecting a carrier, Mr. Lang said Bayer considers both price and convenience. He said Bayer is taking "a wait-and-see attitude" about the new airline.
"The route structure may change; the fare structure may change," Mr. Lang said.
Kevin Lowery, a spokesman for North Side-based Alcoa Inc., the world's largest aluminum maker, said Alcoa would be open to discussing ways it could work with the new US Airways. Alcoa, which does not currently have any travel agreements with US Airways, encourages employees to purchase the lowest-priced fare, he said.
Whitney Eichinger, a spokeswoman for Southwest, said the airline is accustomed to competition and successfully has competed with America West over the years in some of its key markets, including Phoenix and Las Vegas.
"We see consolidation in the industry as good because of the reduction in the capacity," Ms. Eichinger said. "We will keep costs lower than America West and US Airways. Southwest will continue to offer what we are known for."
US Airways spokesman David Castelveter said the new US Airways will offer low fares -- and more.
"What customers will see is that they will have the first truly global network low-cost, low-fare carrier," Mr. Castelveter said. "It will offer a breadth of service they don't have today."
Keeping costs down and fares low may be one of the merged airline's biggest challenges. Michael Boyd, an Evergreen, Colo.-based airline industry analyst and president of The Boyd Group Inc., said it's unlikely fares will dip much lower than their current levels.
Mr. Corridore added that it will be difficult for US Airways to maintain its hub-and-spoke system while lowering costs.