This weekend we look at possible movement in the AA/USAir negotiations about a possible merger. Amtrak talks tough about stealing business airline traffic. And, travel agents and consumers duke it out with airlines over airline fee disclosure.
US Airways, American to meet over merger
After months of speculation, American Airlines and US Airways have gotten permission to speak together about a possible merger. There is a chance the merger will come off, but there are plenty of problems with the mechanics of it.
The summit, called a “Big Tent” meeting by some involved in the process, comes at a pivotal time, as American approaches a year under bankruptcy protection and tries to negotiate a new contract with disgruntled pilots so it can finish restructuring. The meeting is the next in a series of similar gatherings the parties have had since confidential merger discussions started two months ago and aims to build on previous negotiations over synergies and a number of other details related to the airlines, the people said.
Depending on how the gathering goes, some creditors believe US Airways could make a formal merger proposal to American and its creditors in coming weeks. Other people familiar with the matter cautioned that US Airways hasn’t yet decided when it will make a formal merger proposal, though it is keen to do so.
Amtrak high-speed rail to compete with airlines
Amtrak is talking trash with the airlines. They are trying to cut into mid-range business travel with better, faster train service. Right now the NY-Boston lines compete fairly well with air and soon Chicago-St. Louis may see better rail service to compete with air.
The high speed for Amtrak trains traveling through the state of Illinois is about 80 miles per hour. Eventually, Amtrak hopes to boost speeds up to 110 miles per hour.
Marc Magliari, a spokesperson for Amtrak, says the company wants to cut travel time between St. Louis and Chicago to around four hours. “Right now we are about two hours longer than flying. We’re going to get that within an hour of flying or less over time and we’ll get more business that right now is flying.”
Magliari says faster trains mean more round trips per day, which for many travelers is an even bigger selling point than just speed. “Those are key elements when you sell travel. And certainly we’ve shown that everywhere we’ve added frequency and reduced travel times, the ridership goes through the roof because people are looking for better options than driving or flying.”
Federal transportation officials eyeing more regulation of airline fees
Last week, at a forum sponsored by the Open Allies for Airline Transparency held in the Washington, DC, Press Club, airline representatives, travel agents, consumer groups and central reservation system representatives battled it out over the disclosure of airline fees.
Airlines claim they provide plenty of disclosure. Consumers and travel agents claim the opposite. They say that withholding fees from comparison is an unfair and deceptive practice.
“The consumer here is being harmed, and the government has a role to step in,” Bill McGee, a contributing editor to Consumer Reports, said at an event Thursday in Washington. “There is a growing mistrust among consumers for the whole process. That is going to hurt the airline industry and the whole economy.”
Airlines say the regulation would advance the notion of plain-vanilla airline fares, thwarting efforts to distinguish airline offers from others. The rule also could give a leg-up to global technology firms that market fares for multiple carriers through websites such as Travelocity and Orbitz, airlines say.
Ancillary fees have become one way for carriers to improve their lackluster financial performance. Carriers reaped about $1.75 billion from bag fees during the first six months of this year, according to the Transportation Department.