Consolidated shadow play
By Jim Smith
04 October 2007
If there is one drum that continues to be beaten, it is that there needs to be consolidation in the airline business. While airline executives and analysts continue the mantra, in the words of TS Eliot: "Between the idea and the reality, between the motion and the act, falls the shadow." Although I would be reluctant to hire Eliot to run an airline, his point is well taken: the idea makes a lot of sense - at least in the Big Picture - dealing with the synergies or lack of same is another story.
The two-year old merger between US Airways and America West Airlines is a case in point. While shareholders have benefited in the short term, the merged operation has created a plethora of problems, including difficulties implementing a single reservations system, baggage handling foul-ups, flight delays, labour issues and meshing of frequent-flyer programmes, to name just a few.
Flyers are being forced to weigh customer loyalty against the hassle factor, that is, how the advantages of sticking with one carrier stack up against inconvenience. Airlines are faced with the dilemma of implementing cost cuts while striving to retain customers who in the face of continuing competition might utilise another carrier - even at a higher ticket price. While airline executives can point to inherited problems stemming from the integration of networks, passengers don't want to hear it.