American, US Air executives again defend merger plan
Jun 20, 2013, 5:00 AM | Updated: 6:18 am
WASHINGTON – Executives from American Airlines and US Airways appeared Wednesday before a Senate subcommittee, at least the third time this year they have been called to testify on the proposed merger of their two airlines.
If it wins regulatory approval, the $11 billion merger would create the largest air carrier in the U.S. – a prospect that has some consumer advocates concerned but that company officials said will benefit everyone in the long run.
“The merger is good news for everyone except our competitors,” said Gary Kennedy, general counsel and a senior vice president at American Airlines. “It will accomplish great things for its employees, customers, and shareholders.”
Kennedy told the Senate Commerce Committee’s Subcommittee on Aviation Operation, Safety and Security that the two airlines will be able to attract even more traffic after a merger than they would separately.
“We expect to win more business from passengers here at home and across the world,” he said. “It will allow the company to invest in its people, its products” while creating a reputation as “one of the world’s greatest airlines.”
But Charlie Leocha, director of the Consumer Travel Alliance, said that while a merger would make the two airlines stronger than they are now, it would do so at the expense of consumers. Instead of creating healthy competition in the markets they serve, a merger would destroy it instead, he said.
“Passengers in 38 out of the 50 states will lose significant airline competition. Prices will go up … fees will continue to go up,” Leocha said. “These are the kind of avaricious fees that require competition, not more power for the airlines.”
Leocha predicted other problems, including longer delays for thousands of passengers due to “massive” computer systems of the merged airline. He also pointed to troublesome changes that are already taking place, such as the airlines’ announcement that “they’re moving their seats closer together.”
“Combining American Airlines and US Airways brings together two of the worst airlines for customer service, according to the American Customer Satisfaction study,” Leocha said. “Bad plus bad equals worse.”
But US Airways Chairman and CEO Douglas Parker disputed Leocha’s charges, saying the merged airline will “be able to serve all these small communities.”
On a website dedicated to the merger, the airlines said the combined carrier would continue to serve Phoenix, Flagstaff, Tucson and Yuma, with hub operations at Phoenix’s Sky Harbor International Airport. While the merged company will be headquartered in Dallas-Fort Worth under the name American Airlines, which is currently in bankruptcy, it will continue to maintain “a significant corporate and operational presence in Phoenix,” where US Airways is now headquartered, the site said.
Parker and Kennedy repeated their assurances that the merger is the best business move for all included.
“The enthusiasm among workers of this merger will be a powerful driving force that will help in contributions for years to come,” Kennedy said.
Subcommittee members said they would review the testimony from Wednesday’s hearing and keep the discussion open for the next two weeks before taking any action.
