Possible American-US Airways merger could create clean slate for passenger experience improvements

WASHINGTON DC: Since it officially started pursuing American Airlines in January of this year, US Airways has trumpeted how the network powerhouse produced by combining the two carriers would compete with rivals Delta Air Lines and United Airlines. But during that time virtually no discussion has surfaced over how the new “American” would approach creating a distinctive passenger experience.

As US Airways intensifies its campaign to win-over the necessary stakeholders to solidify its takeover of American, one certainty is apparent  – there is wide room for passenger experience improvement at both carriers. “I think at best I’d tell you these airlines are adequate [in the passenger experience],” concludes Atmosphere Research co-founder and chief research officer Henry Harteveldt.

A strict focus on cost containment by US Airways in order to remain profitable has resulted in the carrier making it clear that it would provide only a bit more to passengers than basic transportation, says Harteveldt, which has resulted in the carrier becoming an airline passengers settle for instead of seeking out. American used to be a leader and innovator, he explains, but now the carrier sits in the middle of the pack as carriers such as Southwest and JetBlue “pop to the top” in brand studies for their distinctive products and value.

All the US major carriers seem to be stuck in the average category with respect to quality rankings. American, Delta, United and US Airways each carry a three-star ranking on airline review site Skytrax. Not one US carrier was featured in the company’s list top world airlines for 2012, and none of the US major carriers made the cut for top domestic North American airlines. That list was dominated by hybrid carriers such as Virgin America, JetBlue and WestJet, which offer low-fares coupled with a medium-frills product.

Harteveldt believes that if American and US Airways carry out a merger, the combination creates “a great opportunity to re-write the passenger experience”, and presents the combined carrier with a unique challenge to remain relevant with current and future customers to ensure those passengers will pay a premium to travel with the airline.

But in the short-term US Airways’ management has very distinct opinions about some elements of the passenger experience, namely in-flight entertainment. During a recent speech at the US National Press Club US Airways CEO Doug Parker rejected the idea that it is an airline’s responsibility to offer passengers movies on US domestic flights.

“You can watch any movie you want on your iPad or other personal device, which is what most of our customers prefer,” says Parker. “People do indeed bring their own personal entertainment on that is better than what the airlines provide. So it is just a complete waste of your fare to give you a movie you don’t want to watch and charge you for it.”

American and US Airways may have to take a careful look at the evolution of passenger behaviour in choosing to entertain themselves with their own personal electronic devices versus an expectation of having access to onboard entertainment. “Although a significant percentage of customers, and I would guess the same is true with other airlines, bring their own personal devices, there is still a significant portion of customers who fly that do not bring their own personal devices,” concludes American managing director of onboard products Alice Liu. Some customers retain the mindset that something should be provided to them, she says.

Dallas-based American in late 2011 began offering Samsung Galaxy tablets in its premium and business class cabins on select flights, but unlike other international carriers that have offered tablets to economy passengers for a fee, US operators have so far opted not to pursue that offering for in-flight entertainment on domestic flights. Qantas this week announced that it plans to offer iPads free of charge to all passengers travelling on board its 20-plus Boeing 767s beginning in the fourth quarter of this year. Perhaps that is one small way a combined US Airways and American could distinguish itself from other airlines while satisfying the expectations some customers have of of in-flight entertainment being provided by an airline.

Another unanswered question stemming from a possible American-US Airways merger is the role that a premium economy section would play in the merged airline. American in March of this year declared it would roll-out its “Main Cabin Extra” product across its entire mainline fleet. The product promises 4-6in of additional legroom in economy for passengers willing to pay for extra space. American is developing its extended legroom product in response to Delta’s Economy Comfort and United’s long-standing Economy Plus product.

As a stand-alone entity, US Airways has said it has no plans to offer a premium economy product after reaching a different conclusion about the economics of the offering than its legacy peers. Harteveldt notes that a large portion of US Airways operations are concentrated on the US east coast where flights are 90 minutes or less. In that scenario there may not be enough passengers willing to pay for extra legroom on shorter flights. But he believes a merged carrier has no choice but to retain plans for the Main Cabin Extra product in order to remain competitive with Delta and United.

In touting the benefits of mergers and consolidation Parker remarked that customer will gain more flight options at better times to more places. But in addition to price and schedule, passengers increasingly value a travelling experience that entails more than just transport from origin to destination. Only time will tell if the possible new management at American recongnises the opportunity to create a distinctive brand that lifts both carriers out of mediocrity.