Size matters -- or does it?
Airline carriers in the United States would seem to say yes. The industry has lost $60 billion in the last decade and took a big hit more recently due to a cloud of volcanic ash that grounded flights across Europe. Major airlines are looking to consolidate as a way to return to profitability amid continued struggles with high fuel prices, competition from low-cost carriers, and a limited customer pool that shriveled even more when the recession curbed travel for business and pleasure. Two years ago, Delta and Northwest merged, making Delta the nation's largest carrier. United and US Airways recently broke off merger talks, but many believe those discussions were simply a way for United to entice Continental to come to the bargaining table -- a strategy that has reportedly worked.
But experts are skeptical about the "bigger is better" strategy. They acknowledge that, if the deal is done right, merging two carriers into one will cut down on competition, reduce capacity in a saturated industry that already has too many planes in the air, and allow the newly consolidated company to trim its employee ranks and merge costly operations for services like reservations and gate maintenance. If profits return, the carriers could invest them into improving customer service and possibly waiving fees for baggage and in-flight meals that have raised the ire of travelers. But the key words are "if done right." Many observers say the carriers have proved downright flighty at following through on changes that improve operations and put the customer first.
To read the full, original article click on this link: Will Customers Be the Excess Baggage of Airline Consolidation? - Knowledge@Wharton
Author: Knowledge@Wharton
