Last week, Delta Air Lines and United Airlines announced that they are considering consolidating their operations. It is just the latest in a long line of proposed airline mergers, a trend that industry analysts say is necessary for the airlines’ survival.
I’ve been hearing talk of airline mergers and acquisitions for most of my 20 years in the airline business, and it always makes me nervous. Buyouts, mergers and acquisitions can be messy affairs. They might look good on paper, but merging two airlines is usually an exercise in jamming a square peg through a round hole. The parts might fit if you use enough force, but the result might not look or feel right once the dust settles. Both passengers and employees have reason for concern. For passengers, the main issues are the elimination of overlapping routes, mileage club integration and increased ticket prices. For employees, the sticky issues include union integration, different work rules, salaries, seniority, pensions (or lack of) and layoffs.
I have flown with flight attendants from many defunct airlines, including Braniff, TWA, Eastern, Piedmont, Republic, PSA – in fact, just about every airline that is no longer flying. I also have personal experience. I was with Pan Am for three years before it was taken over by Delta in 1991, and to this day I am occasionally called a “faux pas,” or FOPA, for “former Pan Am” (the more vulgar term is “Blueballer,” a reference to the Pan Am logo). So believe me when I say that no matter how cordial the merger, seniority is always a sensitive issue. Mess with seniority, and watch a pleasant person turn into a fire-breathing dragon – sometimes with good reason. When American acquired TWA, for example, date-of-hire went out the window; all the flight attendants for TWA ended up at the bottom of the seniority list and were furloughed when it came time for layoffs. I still hear news reports and feelings of animosity about that takeover, which happened back in April 2001.
I have heard an airline merger described as an elephant mating with a donkey; it may be possible, but you might not want to see the offspring. I know one flight attendant who has endured eight mergers over the course of her career. She told me that every time it seems to get uglier and uglier. So keep your wits about you as you follow the airline news in the coming weeks, and keep the following things in mind.
1. It takes time. It takes a lot of time from the start of the rumor mill to the actual merger. Look at US Airways and America West; they are still hammering out details two years later.
2. Approvals are required. There are many levels of approval needed before a merger can go forward, both on the regulatory side and on the shareholders’ side. The government blocked a US Airways and United merger six years ago, and the bigger Delta/United combo may not fly either.
3. What “efficiency” means. Airlines say that they will save money by eliminating overlapping routes. Usually this means less-frequent flights, fuller airplanes and staff cuts.
4. What “competition” means. When competitors merge, consumers are left with fewer choices, and fewer choices mean bigger bucks for the airline. In other words, your ticket price will go up.
5. Bigger is not necessarily better. Have you ever noticed that employees from smaller airlines tend to be happier? That is because the employees at big airlines turn into just a number after a while. As a passenger you may already feel like a number, but when your airline gets bigger, you become a smaller number.
6. Expect strife. The merging of two airlines does not necessarily make a happy family. Seniority struggles, new work rules and other battles often continue for many years after the nuptials.
7. There will be some customer benefits. There is some good news. If you belong to a frequent-flier program, you’ll get more for your mileage points and you’ll have more destinations to choose from. However, if the merging airlines belong to different alliances, some accommodations will have to be reached and restrictions will no doubt apply.
8. Change is inevitable. If your airline makes it through all the regulatory hurdles and merges with another carrier, things will definitely change. If you don’t like the changes, maybe you should change airlines. There are always other fish in the sea or, in this case, birds in the sky.
What about the name? Will one airline get to keep the name, or will that merge as well? In the case of US Airways’ merger with America West, US Air got to keep the name. The once-rumored merger between Continental and United prompted speculation: “Conn U”? “ConAir”? A Delta/Northwest merger could become “Detest.” American/British Airways might work as “AmBritish.” As for the new Delta/United merger, how about “Dented” or “Delta United International” (“DUI” for short)?
Heard or thought of any good airline merger names? Send them to me and I will post a list.