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Airline Mergers: Quick Look at the Potential United & US Airways Merger

April 28, 2008 | Posted in: Airline News

The demise of the “imminent” merger of Continental and United this weekend had me pondering the ramifications of the next widely reported merger: United and US Airways.

I thought it would be interesting to check out our flight schedule database and do some quick analysis on these candidates to see what sort of trouble might be brewing for travelers in the path of this potential “marriage”…

Historically United and US Airways have been code share partners – this means they badge their flight numbers on each other where they don’t overlap to “extend” their domestic U.S. coverage:

  • United code shares 190 non-stop city pairs on US Airways planes (metal)
  • US Airways code shares 283 non-stop city pairs on United planes (metal)

The first thing I noticed after crunching a few numbers is that the route systems overlap about 10 fold more domestically than the minimal overlap of the Delta/Northwest Merger (112 city pairs after removing code shares). Both airlines have over 800 domestic non-stop city pairs (835 UA and 870 US).

Competition is the main driver of pricing and 12% overlap is significant enough to cause a good portion of travelers some heartburn related to removal of this competition — note that the combinations of connecting flights explodes when you start combining this non-stop overlap.

A quick check of each airlines international route system shows United Airlines services 46 international destinations while U.S. Airways services 58 international destinations. 28 of these destinations are served by both airlines to cities in Europe, Caribbean, Mexico, Latin America and Canada (AMS, AUA, BRU, CUN, CZM, FRA, GUA, LIR, LON, MBJ, MEX, MUC, PAR, PUJ, PVR, ROM, SJD, SJU, STT, SXM, YEA, YMQ, YOW, YTO, YVR, YYC, ZIH, ZRH).

Competition on these international routes is less of an issue, especially as many routes have foreign carriers with code share partnerships to ferry passengers from the popular hubs to their homes.

My intent on this quick overlap check was not to dive into the vagaries of “synergies” in labor and management, but to provide some quick and basic idea on what a merged United and US Airways might look like.

Cities like Washington DC where United has 80 non-stop domestic destinations departing from Dulles (IAD) and US Airways with 49 non-stop domestic destinations departing from Reagan (DCA) could be significantly impacted if/when a merger occurred as the two airlines try to consolidate that traffic in that highly trafficked city.

2 Responses to “Airline Mergers: Quick Look at the Potential United & US Airways Merger”

  1. Thanks Rick for running those UA/US numbers. Whichever way the mergers and acquisitions end up coming down, I imagine that most excess capacity will be sucked dry. Then the airlines can charge enough to pay for jet fuel and then some. We’ve already seen at least a 30% increase in our Hawaii trans-Pacific market in recent weeks.

    Aloha,
    Jeff
    http://beatofhawaii.com

  2. Rick Seaney says:

    I would suspect at least at 15% to 20% cut in domestic capacity if this merger goes through, similar to the drastic cut made in the US Airways / America West merger

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