Airline merger could benefit local service
February 14, 2013
EAGLE COUNTY, Colorado – The proposed merger between American Airlines and US Airways could open up new markets to the Vail Valley. But with change also comes uncertainty.
For now, local industry-watchers are looking on the sunny side of the $11 billion deal, which, if approved by federal regulators, would create the largest airline in the U.S.
The merger “can only mean good things right now,” Eagle County Regional Airport Manager Greg Phillips said. The best of those things, Phillips said, is stabilizing American, which is currently in Chapter 11 bankruptcy reorganization. American flights account for just more than half of all the seats flying into the county airport now, so a stronger American is good news for the airport, Phillips said.
Since the county has a long relationship with American – and the airline’s flights here are profitable – there’s also the prospect the deal could help open up some new markets currently served by US Airways. That airline has hubs in Charlotte, Philadelphia and Phoenix.
Any of those cities could be a source of potential destination guests, but when Vail Valley Partnership CEO Chris Romer looks at US Airways’ hubs, his eyes drift west.
“A summer flight from Phoenix seems to make sense, since it’s so hot there,” Romer said.
On the other hand, airline mergers historically have led to fewer flights overall, as the carriers try to wring as much efficiency as possible from their newly melded operations. Sometimes, that means using fewer hubs – central locations that provide connecting flights to and from various destinations.
“Some cities will have less service,” Edwards-based air service consultant Kent Myers said. “But (Eagle County doesn’t) serve any US Airways hubs, so we may lose one (hub) and gain another.”
Another longer-term trend in the industry is that airlines are gradually moving toward smaller planes. Eagle County is now served almost exclusively by airlines using Boeing 757 airliners. Those planes – which carry about 188 people – aren’t in production any more, and airlines will start taking them out of their fleets in coming years. The usual replacement is something about the size of the Boeing 737, which carries about 144 people when full.
“That’s the greater concern,” Myers said. “We could have service to everywhere we fly now, but it could be done with smaller aircraft.”
Even that could be a long-term advantage, though.
Myers said Republic, a regional airline that works with big carriers including American, is starting to stock up on 110-seat planes made by Embraer. Bringing those smaller, more efficient planes into Eagle County could make more, economic sense than the bigger aircraft.
Smaller planes might also mean airlines would require smaller revenue guarantees.
Romer said he can envision a scenario in which an airline would use a pair of 737-sized airliners to replace one 757 on a particular route. Using two flights could open up more connection options for both domestic and international travelers, he said.
For the moment, though, not much is expected to change because of the merger.
“But it’s always a changing landscape out there,” Myers said.
Business Editor Scott N. Miller can be reached at 970-748-2930 or email@example.com.