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Do airline mergers deliver on their promises?

A US Airways tail rest on the tarmac near an American Airlines plane at Ronald Reagan Washington National Airport in Arlington, Va. US Airways has won the support of unions at the bankrupt American Airlines for a proposal to fold the two companies into one giant carrier, US Airways CEO Doug Parker said on April 20, 2012.

Jeremy Hobson: Well there's been a lot of buzz recently about another potential airline merger. US Airways is trying to buy the bankrupt American Airlines. And as US Airways makes its case for a takeover, it's making a lot of promises.

But, as Marketplace's Stacey Vanek Smith reports, sometimes promises like this are hard to keep.


Stacey Vanek Smith: A US Airways/American Airlines merger would create the latest mega-airline. US Airways has said it would keep all current hubs intact.

Aviation analyst Richard Aboulafia is skeptical.

Richard Aboulafia: The whole point of merging airlines is to get rid of hubs and all of the expense that they create.

When United and Continental merged two years ago, they put Cleveland on notice that its hub status was in jeopardy. The carrier has also cut back flights at other hubs.

Aboulafia: More destinations, more comfort. Who's merging isn't nearly as exciting as what's emerging.

And what's emerging is a very different airline industry, says Aboulafia.

Aboulafia: It's clear that we're heading towards an end game here where you've got three merged carriers.

And fewer flights and higher fares. Ticket prices have already risen 10 percent this year. And less competition means it will be easier to pass high fuel prices and other costs on to passengers. Still, frequent flyers need not fear. Aboulafia says the airlines will want to keep their loyal customers happy.

In New York, I'm Stacey Vanek Smith for Marketplace.

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.

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