AA and US Will Merge; 5 Possible Winners and Losers

Mark over at TravelBlawg wrote up the news this morning: BREAKING: American and USAirways Merger Settled! Complete In December?

Important Merger Related Dates:

“The next major milestone for the two airlines is a court hearing on November 25, at which the airlines expect to gain approval for the settlement.  American already has approval for its reorganization plan from the bankruptcy court.

The deal, if all goes according to plan, will close in the beginning of December.

January 7, 2014, however, will be “a big day for us,” Scott Kirby, who will serve as COO of the combined airline, told Frequent Business Traveler.  “We will become a single airline or at least take the first step of becoming a single airline” on that day, and offer reciprocal frequent flyer benefits.”

Source:Frequent Business Traveler

What Might Come From the Merger?

Jan 7th could be the day when one is able to fly either airline and credit to one account. It could be the day  that US joins oneworld, allowing redemption and earning across all partner airlines.  It could be the day that transferring between US and AA accounts is allowed.  Or it could be none of these–and just a target for elite benefits (upgrades and such) to clear on either airline, with the rest rolling out slowly.

Today I’ll discuss some of what I like the most about these programs, and what might stay and what might not. We’ll also try to list who comes out as winners and who as losers in each of these possible areas.  The post is pure conjecture–if you disagree I’d like to hear your ideas in the comments.

Note: See yesterday’s post for a detailed explanation of Milenomics’ Short Term & Long Term.

1- Miles Are Allowed to Move Freely

Southwest and Airtran have had this ability for quite a long time since they merged. This extended period of time is very abnormal. The example I think AA/US will follow will be more like United and Continental during their engagement period.  You were able to “link” your Continental and United accounts and transfer your miles in either direction.  What this allowed was for you to take advantage of the better search engine (Continental) and also to pool miles together, and make bookings using that pool of miles from either program.  If there was a mileage advantage in either program (I’m drawing a blank if there were, or if they had aligned charts by this time) you could exploit it by transferring over to the program which cost less miles.  Look for something similar from AA and US in the short run, and in the long run to just have one program moving forward.

Everyone seemingly can’t wait to move their US miles to AA.  If possible, don’t overlook moving AA miles to US and booking some of the better options with US miles.  I’m not saying either option will be better than the other–but remember if miles go 2 ways, don’t automatically assume AA is the better program.  We’ll discuss this as things get closer, and if we can capitalize on this at all (in the short term) I’ll make sure to mention it here.

Winners: short term, likely everyone who has orphaned miles with either AA or US.  Those of us looking at an award we don’t currently have enough for miles in either program but would if miles were merged.

Long term: Star Alliance fans, also probably a net loss for all as some type of serious devaluation/program change will occur.  Changes to AAdvantage to make it more like USDM (no one ways, etc) would be catastrophic.

2 – Exploit (or Suffer) Under Even Less Helpful Phone Agents.

With phone agents already the front line of disinformation (and theft!) for all major award programs, be ready for less helpful–and less knowledgeable phone agents, at least to start.  Some United Elites still swear that Ex. CO phone agents are worse than PMUA phone agents. I generally enjoy AA phone agents, but have had some hilariously bad ones too.  I’m also dreading a call to USDM to book a flight, and have been putting it off to see if I can somehow make the booking happen online.  I’ve had US agents swear United flights are not bookable with miles.  How you could be hired, and placed in front of a phone at USDM without that piece of information is beyond me.

Either way, the ability to exploit the USDM phone agents might go away–since AA’s computers won’t allow the type of crazy tickets that USDM’s manual process allows through.

Winners: Struggling to see who wins here–except maybe US Phone agents (should they get to keep their jobs).

Losers:Be ready to suffer in the short term with agents getting used to a new system. Also likely to lose a lot of the great aspects of USDM in the long term.  You may want to book a *A ticket now, or soon, and lock in your 90k to BKK/HKG. Unfortunately once US leaves *A (soon) you won’t be able to make any real changes to that ticket.

3- When Elite Benefits Come Together

There’s a lot of talk about US’s 4 elite tiers staying around, and the combined airline offering unlimited Upgrades.  Winners and losers will surely exist.   If the program does not take this form–and instead keeps the current AA format there would likely be different winners and losers.

If you’re a top tier on either program you’re probably a little nervous.  Now might be a good time to start to look at the Milenomics Be Your Own Elite Program. We’re currently matching all levels from all programs, and you can name your own benefits.

Hopefully AA’s food sticks around–but with US’s Doug Parker in charge I doubt most of the good that AA has going for it sticks around.  Parker’s been on the record for counting olives, somewhat against Economy+ (MCE) seating, and removed meals from First Class (see: snack basket).  Most importantly Parker did this after emerging from Chapter 11 and a merger–which will give him some length of rope at the new AA I’m sure.

We’re not going to be too concerned here since we’re our own elites–but expect some crazy movement in the Elite Space.  AA made a heavy push to snap up disgruntled Delta and UA elites, so it will be interesting to see how this goes.

Winners: Milenomics BYOE

Losers: AA top Level Elites, US Low/Mid Level Elties.  This one is up in the air and will really depend on the design of the new Elite program.

4- Routes maps, route maps, route maps.

Milenomics loves to study routes.  We’ve talked about them many times, here, here, and here.  The combined US/AA will look different in the long term–for sure.  But in the short term the combined coverage map will be massive:

In the long term the map will be massive too. There will be some slots lost (Mark also covered those in his Post), and those will likely be swooped up by other carriers (New Jetblue routes?? Alaska? or Virgin America?).

Winners: Short Term US/AA flyers who can transit between both route maps where they could not before. Long term: Jetblue/Alaska/Virgin/Whoever ends up with extra slots, serving specific locations.

Losers: Long Term those who rely on routes that will be cut.  Less competition will probably result in higher costs across the board for all travelers across the route map, and even on other domestic carriers.

5- Worst case Scenario: A whole new world

The worst case scenario is that AA and USDM merge into something different–way different.  It is not inconceivable that in the short term things stay pretty similar–but in the long term the program that remains (AA) changes dramatically. If this happens the ultimate winner could be the new American Airlines.

Fortunately these developments will affect us less in the short term–and in the long term we can try to minimize any issues by booking as far ahead of time as possible.  We’ll be OK for a while as long as a grace period is given for big program changes. If no grace period is giving for major program decisions then the biggest losers might be all of us. 

Whatever happens we can’t go back; enjoy the new AA–the good, the bad, and the ugly.