Merge Ahead

With the recent flurry of airline mergers between Delta & Northwest, AirTran & Southwest, and United & Continental, airline industry analysts are now speculating that American Airlines may be the next to merge in order to compete with these mega-carriers.  But with who?

According to a Forbes blog post, analysts from Morningstar believe that American Airlines “needs to make a big splash” to remain a player in an increasingly competitive market.

“Once the industry’s largest carrier, [American Airlines] is now the third-largest…and any scale advantage it may have garnered is gone,” the Morningstar analysts write. “Ironically, AMR is at a substantial disadvantage, given that it steered clear of bankruptcy during the recession,” [Basili] Alukos and [Adam] Fleck say, pointing out that American’s labor rate is the industry’s highest on an equivalent basis.”

Given that it lags behind United-Continental and Delta, Morningstar figures American is ripe for consolidation and would make a solid fit for partner JetBlue.  The two cooperate on domestic and international flights at JFK and Boston’s Logan Airport, and JetBlue’s lighter cost structure would help American be more competitive while beefing up the combined company’s international business.

Late last month JetBlue CEO Dave Barger said his airline does not need to find a merger partner to remain competitive with rival Southwest.  Time will ultimately tell as Southwest’s pending merger with AirTran will certainly enable them to apply some competitive pressure in JetBlue’s key expansion markets like Boston and the Caribbean.

Here’s some more travel news you can use:

  • The tarmac rule imposed earlier this year seems to have had the desired affect — with only one delay exceeding 3 hours in the entire month of August, according to the U.S. Department of Transportation.  Last year, 66 flights sat on runways for at least 3 hours in the month of August, according to the DOT.  The department added that the new rule has had no impact on cancellation rates in August, with the rate of 1% unchanged compared to the prior year.  The tarmac rule has been broken eight times since it was imposed earlier this year on April 29 through the end of August, according to the DOT. That’s compared to 529 runway delays exceeding three hours, during the same time period in 2009.
  • Richard Branson’s Virgin Galactic on Sunday completed its first manned free flight of a spaceship intended to eventually take customers on commercial space flights.  A seat on Branson’s spaceship will cost $200,000 per person, with refundable deposits starting at $20,000.  Thus far, Virgin Galactic has managed to sell 700 seats.  While you can’t yet track the price of these flights on Yapta, we don’t expect prices to drop anytime soon.
  • Budget Travel published a list of the “Weirdest Travel Gear” that included products like GasBGone, a flatulence filter that comes in a pillow or an undergarment form.