Air Mergers Sound Good … But Reality Can Get Ugly

By Christopher Snowbeck, Pioneer Press, St. Paul, Minn.

Feb. 16–Big airline mergers can cause big headaches for consumers — just ask the "cockroaches."

That’s the name adopted by a group of frequent fliers at US Airways to reflect how lowly they believe they’ve been treated by the airline — especially since it merged in 2005 with Phoenix-based America West.

A merger of the airlines’ separate Web sites in 2006 was turbulent, with frequent fliers struggling for weeks to access their accounts and reservations, said Jim Johnston, a West Virginia resident who helped create the group in 2002.

But those snafus were trifling compared with problems last March when US Airways switched to a single reservation system, Johnston said.

"It was utter chaos," he said. "There were stranded travelers, canceled flights, flights running late, lots of lost bags. It took days for some people to get to their final destination."

Airline mergers tend to look good on paper, where the graceful arcs connecting cities on route maps meld flawlessly into a powerhouse combination. Making it reality gets ugly.

While not confirmed by the companies, talks between Northwest Airlines and Delta Air Lines are widely reported to be in the late stages, and a deal that would create the world’s largest airline is said to be imminent.

Twin Cities travelers who lived through the merger of Northwest and Republic airlines 20 years ago know that grand visions devolve into grim reality of glitches and grievances. Even in the relatively small Republic merger,

analysts say, it took several years for the new Northwest to iron out service problems.

"When you’re merging work forces, when you’re merging airplane fleets, when you’re merging baggage systems — there are going to be some glitches," said David Stempler, executive director of the Air Travelers Association, a Maryland-based consumer group.

The most recent case study is the US Airways and America West merger, a May 2005 deal that created what is now the nation’s seventh-largest carrier. The plan was to integrate operations over time, with both airlines maintaining separate operating certificates for a transition period while keeping separate flight crews, maintenance and safety procedures.

The company said it would try to quickly deliver consumer benefits by coordinating schedules, frequent-flier programs and other marketing efforts.

During 2006, passengers did see improvements in customer service. Flights arrived on time more often. Fewer bags disappeared. Consumer complaints declined.

By early 2007, the glow had faded. In April, US Airways officials publicly acknowledged that customer service had fallen to new lows.

"The people of US Airways are dedicated to meeting our customers’ needs," Doug Parker, the company’s chief executive officer, said at the time. "We did not do that in the first quarter of 2007."

The big problem: the ill-fated switch to a new reservation system. Computer glitches caused people to miss flights. Self-service kiosks at East Coast airports didn’t work, and travelers had to wait in long lines for more than an hour just to check in.

The massive delays rippled through the system and torpedoed the airline’s performance statistics compiled by the U.S. Department of Transportation.

The airline fell to last place for on-time performance during the first three months of 2007. In March 2007, it was almost a coin flip if a US Airways flight would arrive on time — almost 45 percent of the airline’s flights were either late or canceled, compared with slightly more than 25 percent for the rest of the industry.

Certain flights were particularly unnerving. A 9 p.m. daily flight from Washington, D.C., to New York’s LaGuardia Airport was late 100 percent of the time in March by an average of nearly an hour.

US Airways accounted for 231 consumer complaints filed with federal regulators that month, or nearly 25 percent of the industry’s total for an airline that handled 8 percent of passengers. The complaint total at US Airways was even higher in April.

Art Pushkin, a frequent flier who helped create the FFOCUS consumer group in 2002, met with US Airways officials in March to discuss the problems and other concerns of his 950-member organization.

It was a good meeting, he said. But over time, Pushkin decided airline officials were indifferent to the concerns of business travelers. He pointed to a reduced number of first-class seats on some flights and changes to the frequent-flier program. US Airways passengers still haven’t benefitted from the merger, he said, in part because the company hasn’t resolved labor problems.

"It costs the airline much more to provide the service under the current contracts," said Pushkin, who is refocusing his group’s advocacy on carriers beyond US Airways. "Their only (recourse) is to take more benefits away from customers."

Puskin, fed up with what he called unreliable service, hasn’t flown US Airways since April.

Tempe, Ariz.-based US Airways has acknowledged problems with the company’s integrated Web site and reservation system and moved to resolve the issues as quickly as possible, said Andrea Rader, a company spokeswoman.

The Web site troubles, she said, affected only about 10 percent of customers, and the airline resolved the problems within 30 to 60 days. Most of the problems with the reservation system were resolved by the end of the summer, Rader said.

Reductions in the number of customer complaints tend to lag actual improvements in airline operations, Rader said.

US Airways has seen signs of improvement in its on-time performance. In December, a particularly tough month for the industry, it was best among the largest carriers, with 74.5 percent of flights on-time. It was No. 18 out of 20 airlines for on-time performance for all of 2007, the industry’s worst year since 2000. Northwest didn’t fare much better, finishing 15th.

Rader challenged Pushkin’s assertion that there’s a link at US Airways between customer-service issues and labor problems. And she said the carrier is attentive to business-traveler needs. "Business travelers are the bread and butter of any legacy carrier’s business," she said.

The bottom line, Rader said, is that customer-service issues probably are inevitable in any merger, as they are during bad weather. But to jump from that observation to the conclusion that mergers are a bad idea is shortsighted, she said.

"There are a lot of people working today who wouldn’t be working if these airlines hadn’t merged," Rader said. "Consumers are also citizens and taxpayers, and what consumers get out of a more stable airline industry is service to communities that they might not otherwise have."

Kevin Mitchell, executive director of the Maryland-based Business Travelers Coalition, notes that US Airways battled service problems before the merger. But that’s not to say consumers should expect a bed of roses if there is a merger between Northwest and Delta.

"You’ve got to integrate essentially everything, and it takes a while before you’re operating as one airline," he said. "And then it takes even longer to be operating as one team."

Christopher Snowbeck can be reached at csnowbeck@pioneer press.com or 651-228-5479.

State of anxiety: Minnesota officials nervous about merger talks. Page 6A

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