U.S. Markets closed

Potential US Air / American Merger: Fliers Lose Either Way Says Peter Greenberg


What has smaller seats, longer lines, higher fees and is more crowded? An airline after it merges. But the not so funny part of this riddle is that the answer is the same even if the airline, in this case American, doesn't merge.

That's the sad reality of the industry today, as well as the assessment of Peter Greenberg, Travel Editor for CBS News and author of the Travel Detective blog, who has tracked the tourism and aviation businesses for 25 years.

"Two years ago, we had six legacy carriers in this country. If this thing goes down, we'll be down to three," Greenberg says of a possible merger between US Airways (LCC) and American Airlines.

He says ''it's a crap shoot, too close to call'' whether American will able to develop a plan over the next six months that is suitable to creditors, unions and the court and allow it to emerge from bankruptcy. In the meantime, US Airways is patiently waiting, to make an unofficial merger proposal official. Either way, Greenberg says American is not going away, but will face a bleak future of tough decisions that he likens to choosing between getting stabbed or shot.

"Just because of their mass and size they're going to stay around," he says, ''But the question is, do they stay around as a stand-alone? In a world of consolidations and mergers, the current thinking would be that they don't."

Which brings us back to that riddle we began with, and the harsh reality of a business that's struggling to cut costs and return to profits. It's a scenario that will be "a lose-lose for the travelerm," Greenberg says, pointing out that "fares are up 19% from year ago, and it's not because of fuel, it's because of capacity."

As for whether you should still book trips and fly with a bankrupt airline, the Travel Detective says, "Of course you do," but warns not to get too attached to your frequent flier miles.

"They have no incentive to displace revenue passengers with free tickets... when they're flying at 86% load factor."