Interview with American and US Airways Executives: Impact of Merger on Frequent and Premium Flyers

Following a year-long courtship by US Airways of American, the boards of both airlines voted yesterday to approve a merger.  The move will create the world’s largest airline by passenger traffic, surpassing two recent holders of that title, Delta Air Lines and United Airlines, and returning American to a position it has held several times before.

At a news conference in Dallas, executives from the two companies said they plan to complete the combination by the third quarter of 2013 and hoped to achieve $1 billion in annual cost savings and increased profits by 2015.

Once consummated, the merger will leave three large so-called “legacy” or network carriers in the United States.  Only five years ago, there were six.  In the interim, Delta merged with Northwest and United with Continental.

The combined company will be run by US Airways CEO Doug Parker.  AMR’s CEO, Tom Horton, will serve as nonexecutive chairman through early 2014 to help with the transition.

Frequent Business Traveler sat down with executives from both airlines to discuss the impact of the announced merger on the frequent business and luxury traveler.  Derek DeCross is vice president of global sales at American, and Andrew Nocella is senior vice president of planning and marketing at US Airways.  We also met separately with Lewis Rothkopf, a frequent flyer and executive at a digital advertising company, to talk about the view from the passenger seat.

Jonathan Spira:  Let’s start off by looking at how the merger will impact American’s premium offerings, which are typically what our readers are most concerned with.

Derek DeCross:  As Tom [Horton] mentioned earlier today, our dedication to these high value customers will continue.   When you look at the types of products that [the merged airline is] going to offer, we’re going to be the premier carrier.  You’ve already seen some plans: the A321T subfleet for transcons, the new Triple 7 300 that is flying from Dallas to São Paulo and will start to fly out of JFK in the next few months… These things are pivotal to delivering that kind of customer base.

Andrew Nocella:  These products [what Derek mentioned] are the products we believe in at US Airways.  We’re currently rolling out Wi-Fi in our fleet right now, selecting a vendor for international Wi-Fi, all of our wide-body A330s have direct aisle flat bed seats.  We, too, are moving towards a modern fleet, taking delivery of A330s and A321s.

JS:  What other investments will we see in the short term?

DD: It’s tough to delve into more things and we have to wait for regulatory approval but, clearly, high-value customers are extremely important to making this airline succeed (the new American) so you will continue to see the types of investments that we’ve made in the product including more in flight Wi-Fi, more and improved in-flight entertainment systems, 100% aisle access in business class, new lie-flat seating.   These are the things we’re dedicated to delivering to our customers.

JS: What will persuade the discriminating flyer to fly with the new American and what about when things go wrong such as irrops?  As a higher-status frequent flyer on several airlines including American, that’s when I need the airline to come through for me.

DD: First, you’ll see the best network of any airline for corporate and business customers.  [The new airline will have the] best clubs and the best team of people.  If something goes wrong, they are there to fix it and make it a painless process for our customers.  We’re continuing to keep the focus on this important customer group.

Click here to continue to Page 2 – Frequent Flyer Programs and Route Networks

Pages: 1 2