American Airlines US Airways

How the US Airways/American Merger will Probably Affect Award Travel

US-AA merger

So the Department of Justice officially gave US Airways and American approval to go ahead with their merger. The two airlines announced that reciprocal elite benefits will begin on 1/7/2014 though they didn’t go into detail about what that would mean. Here are some of my predictions about what we can expect to happen next, focused mainly on award travel since that’s the bulk of what I do.

1. Less competition means less paid seats and higher prices

This is nothing revolutionary, but the consolidated airline is eventually going to cut flights to become more efficient. That means there will be less flights operating to the same destinations and the simple laws of supply demand dictate that prices will probably go up. That’s bad for consumers and that’s why the DOJ initially protested the merger, but US/AA made some promises about keeping gates and hubs which really were token concessions. Cranky Flier has an in-depth write up if you’re interested. There is nothing we can really do as consumers about this, it’s just a fact of life and something we might need to deal with.

Some privileges (but not all) probably will carry over when reciprocal benefits are introduced
Some privileges (but not all) probably will carry over when reciprocal benefits are introduced

2. AA fliers with status will get US status and vice versa

Like I said, the two airlines have announced that reciprocal benefits for elite members of each program will begin on January 7th. This could be beneficial to a lot of people, having status on two airlines never hurts. However, I (and almost everyone else in the game) tends to doubt that US elites will get the best AA benefit – 8 systemwide upgrades. If those were guaranteed, I’d say this is a great thing for fliers of US, but I doubt it will happen. Still, status ain’t a bad thing to have.

US Airways fliers will lose the extensive route of the Star Alliance but will be able to redeem their miles for products like Cathay Pacific First Class
US Airways fliers will lose the extensive route of the Star Alliance but will be able to redeem their miles for products like Cathay Pacific First Class

3. US Airways will leave the Star Alliance and join Oneworld

This has already been announced, but it’s worth mentioning because as soon as they do that you won’t be able to redeem US miles on the plethora of Star Alliance carriers anymore. Oneworld has great coverage of South America and nice carriers to Asia, but its route network is nowhere near as extensive.

4. At some point, you’ll be able to transfer miles between the programs

This is a pretty safe bet. It happened with Delta and Northwest, United and Continental, Southwest and Airtran, etc. etc. At SOME point you are going to be able to transfer miles between the points programs of US and AA and vice versa – almost definitely without a fee. That means you might be able to combine balances to get some killer redemptions that you wouldn’t otherwise be able to afford. This is great, but is ameliorated by my prediction that…

5. Both AA and US are going to devalue their chart sooner rather than later

While the merger was up in the air, I was pretty confident that the award charts were going to stay intact because the airlines weren’t going to do anything that looked unfriendly to consumers. Now that the merger is back on though, I fully expect AA and US to follow the example of Delta, United, Southwest, Alaska, etc. etc. and devalue their award charts. 2013 is the year of the devaluation and these two airlines aren’t going to want to miss out.

I am hoping that nothing will change for a few months (due to personal redemption plans), but it honestly could happen at any time. Hopefully the two airlines give us advanced notice like United (awards booked after X date cost the new prices), as opposed to the way Delta did it (awards FLOWN after X date cost the new prices). Still, US and AA have some great deals that are soon going to be bye bye – I’d book them now, especially if I had top status and could cancel without penalty.

This itinerary would currently cost you 90,000 US Airways miles in business class (and some work finding a phone agent wiling to book it)
This itinerary would currently cost you 90,000 US Airways miles in business class and some work finding a phone agent wiling to book it (image from gcmap.com)

A) 90,000 miles round trip to North Asia in business class with a stopover in Europe (120,000 miles in first), US Airways

Currently I could fly to Hong Kong with a stopover in Zurich for 90,000 miles round trip in business class. That’s 10,000 miles LESS than it would cost just to fly to Zurich and back. Or I could just fly to Hong Kong and stopover in Taiwan and take EVA Air’s Hello Kitty plane. Either way, 90,000 miles RT business to North Asia is an amazing value over any of the other rewards programs (the other Star Alliance carrier United would charge 120,000 PRE-devaluation).

This entire itinerary would only cost 135,000 AA miles in business class right now (gcmap.com)
This entire itinerary would only cost 135,000 AA miles in business class right now (gcmap.com)

B) 135,000 miles for a distance based award up to 19,999 miles, or 150,000 miles for a distance based award ticket up to 24,999 miles in business class, American

If you have the time to plan one, distance based awards or round the world tickets are a GREAT value on American right now. There are a bunch of rules that you need to learn which I can’t get into here. Bottom line is, you could fly Lima to JFK to Paris to Chicago to London to Boston all for 135,000 miles in business class, spread out over a year – 2.5 vacations. It takes a lot of work but represents an INCREDIBLE value.

I’ve been dying to book one of these but I don’t have the time to fly it – if anyone is interested in hiring me I’m willing to do it for my regular rate (it’s not a standard award so technically it should cost more.

If you’re the DIY type, Milevalue has a great write-up across multiple posts, while ORD to Anywhere has some great examples of awards he has booked. But yes, say bye bye to this award post-devaluations; if we’re lucky they’ll stick around until after the merger at only a slightly higher price but I don’t expect them to exist forever – they are TOO good.

Final Thoughts

Mergers, like devaluations, are a fact of life. The best thing we can do is take advantage of the situation and hope for the best. Expect value of US and AA’s points to drop, but expect the “game” to change in response to that as well – the exciting part is seeing what happens next!

Joe
Just an average joe trying to fly his family for less
http://www.asthejoeflies@gmail.com

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