The Miles Files

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May 10, 2005

America West/US Airways (Visited)

Speculation, Advice and Panic

There’s a buzz in the cities of Phoenix and Arlington, Va. We are referring, of course, to the possible merger, of America West and US Airways, either via a codeshare or actual merger to create over time, a single airline and single frequent flyer program. Here’s what we think:
In some variation, this will happen and is likely to be news near the time you read this. We suspect that the two programs, Dividend Miles and FlightFund, will announce a reciprocal agreement between the two programs shortly. This will be similar to the current reciprocal relationship that members of United Mileage Plus and US Airways Dividend Miles currently enjoy, but better. As you may know, the relationship between United and US Airways is alliance-orientated, not partner-orientated. This means that members of US Airways Preferred elite status do not enjoy similar elite benefits when flying United. However, we believe that if and when America West and US Airways announce any relationship, it will likely mirror that which members of FlightFund enjoyed through the brief relationship they had with Continental OnePass, and that would include reciprocal elite benefits such as space-available upgrades, etc.
We also think that such an announcement won’t mean a seamless relationship overnight, and any integration of the two airlines will likely take nearly two years to complete, though we suspect that the integration of the two frequent flyer programs will be accelerated, and we’ll see a single frequent flyer program within one year’s time. The problem is that with the loss of many marketing executives at US Airways, and lean staffs overall at both airlines, there’s not many chiefs left to make this happen. Right now our money is on the marketing staff at America West FlightFund to lead the integration, and frankly, with what we’ve seen coming from this program in recent times, it’s all good for members on both sides.
We foresee several other things happening that can and will benefit the members of both programs. That mileage balances in both programs will merge together over time with no loss, and that means members really don’t have to worry about what will happen to their miles. We highly recommend that members of both sides get in as many partner and promotional bonuses as they can over the next 6 months to enjoy enhanced account balances, because over time there will be a single set of partners and some may be gone.
We also suspect that the synergies of the two airlines will mean a relaunch of service to Hawaii for the benefit of leisure traffic westward, as well as enhancing the overall appeal of a low-cost, but major player in frequent flyer programs. Many years ago, America West had service to Hawaii on their own, and the management of America West at that time admitted the sole reason was for the benefit of their frequent flyer program. It’s a no-brainer for them, given the popularity and expanse of America West Vacations.
And finally, we’ll speculate on the surviving name. The airline itself will likely be called US Airways to remove the regionality of the America West brand (remember, US Airways has several important international routes). And we don’t think they have the horsepower or money to launch a new frequent flyer program. Also, we don’t see FlightMiles or DividendFund. While we think that the America West marketing staff will be key in the merger, we believe that the Dividend Miles would be the better choice for program survival. For one, it has more current members and would require far less expense to rebrand. It is also not tied into the ideas of miles related to air fare paid, as is the history of the name FlightFund. In addition, today’s loyalty programs are less driven by “flights” than in years past. But what do we know?
All in all, this is one of the best news stories to emerge from frequent flyer programs in the past two years … ever since US Airways announced a partnership with United Mileage Plus. And yes, we fully expect this new entity to remain a proud Star Alliance partner.
End of panic.

Posted by Randy Petersen at May 10, 2005 2:55 PM

Comments

Well, Randy, you were right in your guess about the future service to Hawaii by America West. The recent announcement by America West tells us that there indeed will be an America West route to Hawaii. And I agree (oh, how I hate to do that!) with your generally optimistic attitude toward the merger of US Airways and America West. The routes, taken together, seem to make sense. What a new big airline they will be! I have one word of caution: it looks as tho US Airways will be swallowed by America West, and that is a lot to digest. America West has gotten respect, in recent years, for its good management. Whether that management will be good enough to manage the merger remains to be seen. US Airways may carry with it some rather large problems.

Posted by: Mark Terry at June 7, 2005 9:42 PM

And one more thing. When you wrote "End of panic," did you mean that the "merger" of US Airways with America West puts to rest all concerns about the future of these airlines? Is America West so financially strong that it can swallow US Airways without getting a stomach ache? If two sick airlines lean on each other, might they not both fall down? I think these concerns remain.

Posted by: Mark Terry at June 16, 2005 6:25 PM

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My life's been pretty dull recently. Shrug. My mind is like a void. I haven't gotten anything done lately. I can't be bothered with anything recently.

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