The merger of American
and U.S. Airways was thought to be weeks away, until they were notified the
merger was put on hold. The U.S. Justice department decided to block the $11
billion deal that would benefit both airlines in the long run. Before the deal
can go through, the U.S. Justice department have to approve the deal will not
affect society as a whole. The merger would first have to go through several
phases because of certain bankruptcy issues. According to the Huffington Post, American
Airlines is ranked 3rd and U.S. Airlines is ranked 5th
when comparing them to other large United States carriers. “When they merge,
they will have 1665 combined routes.” The U.S. Justice department put a stop to
the merger because they believe there will be too much control over these
routes. They think the company will be able to charge as much as they want
because of decreased competition. There is a possibility of this happening, but
in today’s economy there still has to be logic when it comes to ticket prices.
An airline does not want to lose customers because of sky rocketing prices.
According to Doug
Parker, currently the CEO of U.S Airways, told the Senate panel “that the deal
would be good for consumers by creating a bigger airline with service to more
locations than either American or US Airways can offer on their own. It would
be the world's biggest airline.” A larger airline would give the consumer a
broader variety to choose from when they choose flights. This would take away
some competition, but it would not create a non- competitive market like some
believe. There are still other large airlines such as Delta, United and
Southwest that compete against one another every day. There are companies such
as Virgin America that have voiced their opinion against the merger. Virgin
representatives say that “proposed deal between U.S. Airways and American would
further solidify already considerable impediments to new entrants.”
If this merger is
allowed to proceed, a big task for upper management will be to find the best
way to merge the seniority employee list of both companies. They would try to
repeat what has happened when U.S. Airways and America West merged many years
ago. The almost 8 year old dispute has went on long enough, and has dates set
to finalize a decision. According to thestreet.com,
“the two sides agreed to a binding arbitration, but the result was a
controversial Nicolau ruling that strongly favored America West pilots.” This
caused the U.S Airline pilots to leave the Airline Pilots Association and form
the U.S. Airline Pilot Association. The entire process has been a headache so
to speak, which has still not been finalized. If the new merger happens,
finding ways for both sides of pilots to mutually agree on the merging of the
seniority list will be a priority. Upper level management will need to learn
from previous mistakes so their pilots are not divided.
GAO." The
Huffington Post. TheHuffingtonPost.com, 20 June 2013. Web. 11 Nov. 2013.
Koenig, David. "Local News." Challenge to
US Airways-American Merger Sets up Legal Fight.
Charlotte Observer, 19
June 2013. Web. 11 Nov. 2013.
Reed, Ted. "US Airways Pilots Look to Endgame
in Seniority Dispute." The Street. N.p., 09
Aug. 2013. Web. 11 Nov.
2013.
Bartz, Diane, and Karen Jacobs. "Virgin Jumps
Into Debate Over US Airways, American
Merger." Fox
Business. N.p., n.d. Web. 11 Nov. 2013.
I think they should try the opposite of what they did with US Airways and America West. A 56 year old pilot with 17 years on the job should never be placed behind a 35 year old with only a few months under his belt on the seniority list; an unfair placement that happened under that merger. Not only do you have to take age into consideration, you have to take status and category into account, too.
ReplyDeleteIt is a bit of an unfortunate arrangement, given that it has already taken eight years to settle the seniority dispute you mentioned, and it will be still be a source of resentment in pilots for the rest of their careers. If the situation isn’t handled delicately it can result in a dangerous environment, as people from any industry have a breaking point, and a disgruntled pilot is a dangerous thought.
ReplyDeleteWhile I agree that a larger airline may benefit customers to some degree, it seems like this merger will inevitably lead to higher ticket prices across the industry. If there is less competition, there is nothing stopping companies from increasing prices. It will be interesting to see how the consumer reacts to these increases if they occur.
ReplyDelete