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FareCompare.com CEO Rick Seaney on the impact of US Airways merger with American Airlines on the industry and consumers.
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-- airlines and US Airways are officially merging create the world's biggest airline.
The new company would have a market cap of eleven billion dollars much higher than that of the United Continental which currently holds the title.
So what do what don't you.
Reports say American creditors would own about three quarters of the new company.
US Airways shareholders about a quarter down notice I said creditors -- shareholders.
American has been wallowing in bankruptcy since the end of -- -- 2011.
So this deal brings them out of that hole.
Now any changes resulting from this merger won't be felt for some time.
The airlines won't be able to make changes until after the merger gets approved by a bankruptcy judge and the departments of justice and transportation which could I could take months.
But the biggest change you'll see is rising airfares mostly since there'll be less competition.
The big questions surround the frequent flier programs first off -- not -- allows you already racked up.
Program submerged in the past that's typically what happens miles from both are merged into a single account but.
Since it's going to remain American Airlines the most likely scenario is Americans one world alliance will be the awards program that -- some place.
Now that could also mean a serious lack of award of a seat availability.
Something American practices but US air treats as an unwanted expands.
For more on what this means for you let me bring in CEO affair compared -- -- -- -- eight.
-- always great to have you on the show this is a big big big -- what does this mean for people's bottom lines.
Yeah I think for most consumers in the short term it doesn't mean a lot but they give it this way Jerry.
There's one -- airline to fire out and -- sell that every airline has to match and there's one less airline.
To drag -- heels -- another airline raises its prices and force them to roll back.
You take that -- multiply by four with four big mega mergers in the last four and a half years.
And that's just that competition in that daily activity that occurs is gonna drive up prices.
But that's probably a problem virtually fifteenth when he sixteen and -- beyond right now thanks a lot airlines are had a showdown.
Yes yeah it's gonna take a while right now airlines are trying to raise prices they each they tried.
Three times now in the past.
Five weeks they haven't been able to raise prices because people's wallets won't let them do it.
Well and -- what they do -- they roll out these price hikes in of everybody in the world doesn't follow that they take them back.
That immediate an interesting example of what hat could happen a ticket prices after the delta merger.
On one route between Saint Paul and Atlanta prices went up 20%.
So that's what we could be looking at some routes could get just people and get -- sure.
Prices that just go through the -- Do you think that'll happen this.
-- there's -- to be some.
He had there's going to be some winners and losers some big cities like Dallas probably Washington DC LA.
We're gonna have cheaper prices there's going to be some cities like you mentioned there on some roads like Atlanta to Chicago where the prices go up dramatically.
The ones that are gonna get hit the worst are the smaller cities because.
They don't have a lot of competition there's a hundred of those cities right now that American -- US Airways service.
Those cities that that's 4900.
Around.
And they're gonna have less competition and when prices go up there's no competition to drive them back down they're gonna take the brunt of these -- right.
Right -- the long -- wow okay -- show folks another picture here I love these pictures when it comes to airlines are always great.
So this is -- -- dead duck pubs right so where we gonna have the -- I think there should be a total of eight.
He -- New York Philadelphia Charlotte Miami Dallas Phoenix Los Angeles Chicago.
Now we make of this.
It is this a good list is is make America more competitive what do you make of it.
Sure you have the eastern seaboard blanketed as you notice -- Washington DC would be included in that so I think the loser probably there is Philadelphia.
Because it sits so close to New York in between Washington -- see the growth probably in New York Philadelphia loses a little bit with US Airways probably rolling back some of its international flights.
On the western seaboard.
-- you're looking at Los Angeles and Phoenix being the only hubs because Alaska has a lock on the Pacific northwest so Phoenix probably lose a little bit.
Los Angeles and Dallas and Chicago probably gain so the loser probably Phoenix and Philadelphia the other cities will get more traffic and cheaper prices by the way.
One more quick question then I got -- out.
Frequent flier miles they'll merge obviously is good news for frequent -- any downside here -- those folks.
Well a couple things you know you emerging a huge program we're talking about a hundred million folks in the combined airline for US Airways and American.
And all those hundred million people -- to go to Hawaii London Paris Rome Orlando and Las Vegas.
So there's your big problem right there.
The other problem is in the new model at a hundred dollar barrel oil there's no in.
Those would typically be given away with awards don't -- those will be available to folks as well.
All right well.
Rick we've got to find some bright side so that's it's at the top story for -- Spencer coming on tonight it's always great to see you say they're gonna have some new aircraft and some other I'm so there are few bright side they will serve hot food -- recht thanks for coming on the fact that a.
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