Fasten your seat belts if airline merger takes wing
http://www.azcentral.com/business/columns/...21talton21.html
Apr. 21, 2005 12:00 AM
A few times each day, US Airways sends Airbus jets out of Phoenix Sky Harbor International Airport with passengers bound for Philadelphia and Charlotte, where they will change planes for cities in the East and South.
The airline could become much more important in Phoenix if a deal is consummated to merge with America West Airlines. I hope I'm wrong, but this gives me an Airbus full of bad feelings.
US Airways is the toxic lover of the airline singles scene. Over the years, it has hooked up with good carriers. But their good never overcame pathologies that seem the one constant of US Airways. advertisement
Pacific Southwest Airlines was a friendly, innovative airline based in San Diego. Piedmont was an industry paragon of low costs and great service, based in North Carolina. Both merged with then-USAir with the conventional wisdom saying they would bring these virtues to the combined venture. USAir remained mired in high costs, labor trouble and executive malpractice.
The consequences were not abstract. Dayton, Ohio, for example, built a sumptuous hub for Piedmont that was destroyed by the merger despite the promises of USAir executives. In North Carolina, the scars of the takeover remain the conversation of cocktail lounges and church socials.
Now here's America West, good-looking and freshly cleaned up after the 12-step program to move toward being a low-fare airline. I'd like to believe America West's intellectual capital, combined with the changes wrought by US Airways' latest time in bankruptcy court, would create a powerhouse. History, though, doesn't support the view. US Airways' troubles have withstood visionary turnaround artists, committed employees, take-no-prisoners investors and judges and big incentives from communities.
Changing a corporate culture is difficult. The difficulty rises when industries become obsessed with mergers. The focus becomes making a deal and finding the draconian cutbacks necessary to "make the numbers work." Customer service, innovation and competitiveness become secondary. No wonder most large mergers don't work, and many drag down the combined company (just ask Carly Fiorina).
Despite the reassurances from some corners that the merged airline's headquarters would be here, I worry. Wall Street might want it on the East Coast to keep a better eye on its money. If so, it's the same old story: Arizona isn't growing new companies to replace its steady losses. It's the same old story of good jobs lost, community leadership eviscerated. We don't have unlimited pages in this tale before this place becomes a mere people warehouse riding a real estate bubble.
Travelers in the West have enjoyed a sweet deal, thanks to competition. Anybody from back East can tell you about the horrific fares imposed by "fortress hubs," where one carrier holds a near-monopoly. An America West-US Airways deal would set off the long-anticipated consolidation of the industry.
The investors pushing this move want to see far less competition.
Even if Sky Harbor continued to see strong rivalry, the merger might stall the airport's ability to improve. I can see a tough (or desperate) new US Airways threatening to move hub flights to Las Vegas if Phoenix tries to raise fees to help fund infrastructure.
I hope I'm wrong.
It would be especially sad, considering the way this town has backed America West and fallen in love with it.
As a woman said Wednesday after reading the news, "Well, there goes my favorite airline."
Reach Talton at jon.talton@arizonarepublic.com or (602) 444-8464.