The Impact of the American and US Airways Merger on Charlotte Douglas International Airport

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On February 14, 2013, the bankrupt airline American Airways and US Airways announced their $ 11 billion merger. At this point it still needs to be approved by a bankruptcy judge in New York and the US Airways shareholders. Additionally, it has to be reviewed by the Justice Departement's antitrust division. However, the experts involved in the merger are fairly certain that the merger will pass these steps.

Doug Parker, current CEO of US Airways, will become CEO of the new airline. Thomas W. Horton, chairman and chief executive of the AMR Corporation, American Airline's parent, will be chairman of the combined company for approximately one year before leaving the merged airline.

The full merger is estimated to be completed no sooner than the third quarter of 2013. Frequent fliers will therefore have enough time to cash in their miles, should they so choose, even though both airlines announced that existing miles will continue to be honored.

Should the merger go through, the new airline will be the largest in the world, offering 6,700 flights per day to 336 destinations in 56 countries.

The new airline is expected to keep all existing hubs which will turn Charlotte Douglas International Airport into its second-busiest carrier in terms of takeoffs and landings, with about 650 flights per day. In terms of passenger embarkation, Charlotte would be the third largest hub.

According to the rating agency Moody's, the three major hubs for the airlines, among them Charlotte Douglas International Airport – could suffer from the merger operation. Moody's states: “The key risks for those airports are that the combined carrier may reduce service on overlapping routes or reduce service to markets connected by these hubs. Such capacity reductions give airlines a greater ability to raise fares, which in turn can result in lower passenger volumes.”

Additionally, Moody's points out that a cut in service would automatically lead to a declining number of passengers. This would have a negative impact on Charlotte Douglas International Airport as it relies on connecting passengers for more than 75 percent of its traffic.

At present, however, the two airlines have only 12 routes overlapping. Therefore, it is unlikely that the new airline would cut a great number of routes. Additionally, the merged airline will have the advantage of a bigger network to attract business travelers and corporate accounts. History has generally proven, that mergers have created healthier airlines increasing their ability to invest in new planes and products.

Author: Cornelia Heim, Legal Trainee, Charlotte