In this week's blog entry, I will be updating the past topic of airline mergers. I will update some of the most pressing issues and previously talked about topics from the last entry on this subject, discussing United Continental and American Airlines.
A hugely important day for the new United Airlines turned out to be a massive disaster on March 3rd. Prior to this day, United was still operating with two completely different reservations systems and frequent flier databases. The months of training and preparation that United's 15,000 agents received for the switch-over turned out to be a failure of epic proportions. Hundreds of flights across United's network were delayed, kiosks stopped working causing huge lines to speak to agents, and reservation lines were jammed. By the end of the week the flaws had been worked out of the system and operations were mostly back to normal. One could almost expect something like this to happen when two of the largest airlines in the world unite to form the world's largest airline, and millions of reservations must be combined.- The Daily Beast
In more recent times, the product of the merger between one of the best airlines in customer service and satisfaction- Continental, and perhaps the worst- United, has unfortunately begun to take on the characteristics of the latter of the two. Despite the former Continental CEO taking the reigns of the new airline, there seems to be a lack of emphasis on customer service. Only two airlines in the industry received lower ratings in customer satisfaction last year, American and Continental. The surprising one here obviously is Continental. But perhaps it actually is not so surprising, considering the reputation of the airline they merged with. Between changes to pet transportation procedures which make it very expensive to transport them, older aircraft being used on long haul flights, poor treatment of valued customers, and seemingly endless instances of employees "telling off" passengers, the new United has customers angry and disappointed.
With the nightmare of the reservations switchover being completed, the only thing left barring these two airlines seamlessly becoming one is pilot seniority integration. To date, the seniority lists are completely separate. United pilots only fly with United pilots and only fly United aircraft on United routes, and the same goes for Continental pilots. A member of ALPA says that negotiations between the two groups have picked up greatly since Capt. James Heppner, took office at the ALPA branch at United at the beginning
of 2012. The negotiations haven't yet focused on the most important issues: wages,
retirement and "scope"- the contract rules that govern how much outsourcing of
pilot jobs United Continental can achieve through contracts with regional
airline affiliates and code-sharing with other carriers -The Wall Street Journal. The two branches of ALPA have agreed to a six-month process for seniority
integration and will resolve any differences by submitting to binding
arbitration. At the earliest, seniority integration is not expected until the first quarter of next year.
In recent news, American Airlines can't seem to catch a break. Last week's hail storms in Dallas took out 55 of its mainline aircraft and caused 1,600 flights to be cancelled between American and American Eagle in the 3 days following the storm. This ads more cost to the airline already struggling to make it through bankruptcy.
U.S. Airways has reportedly become more aggressive in pursuing a merger with American Airlines, according to The Wall Street Journal. U.S. Airways has told some AA creditors that a merger could add $1.5 billion in annual revenues and cost savings. On the other hand, U.S. Airways interest could draw out the bankruptcy court proceedings, particularly because an anti-trust review would need to be completed prior to a merger. This could hurt creditors' recoveries because of the resulting lingering in bankruptcy court which would decrease the company's value. AMR Corp recently won ability to retain exclusive control over proposing a reorganization plan for another six months,
but creditors could seek to end that
exclusive period if they felt there were better options.
You pointed out what was expected to happen with all of the mergers happening as of late. It is a very complicated and drawn out process with many self-serving parties involved. It's a wonder that the merger process isn't more hectic than it already is.
ReplyDeleteI wonder how aggressive American Airlines will really be into merging with U.S. Airways. I'm sure that American will try to keep it's iconic shiny aluminum hull styling. Perhaps it will be a merger in name only. One thing however, The Sky West merger with U.S. Airways went seemingly okay, perhaps the potential merger with American will go over well.
Interesting to see that after 2 years United pilots are still flying with United pilots of United planes for United routes. Sad to see how United has treated there passengers and there loyal passengers. I have heard the same thing that loyal Continental passengers hate the merge with United for those exact reasons. Its sad to see how airlines now and days treat people like cattle instead of paying customers.
ReplyDeleteHospitality has hit the floor in many industries and the airlines are always at the top of the public perception. You would think they look for their approval and work harder to exceed the expectation since their employment is a direct variable of ticket sales. I was unaware of the whole picture you have painted and appreciate your research on the topic. I hope United can rise to the occasion and seek the approval as well as coach on simple customer service and technical problems since they are the largest domestic airline.
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