I get so caught up in the number crunching surrounding mergers that I end up grappling with a ton of metrics which invariably lack the measurement of the customer’s connection to the brand and delivery of service.
As far as numbers go, the $11 billion merger between American Airlines and US Airways (AMR & LCC) is impressive. The flying public stands to benefit from 900 routes or 6,700 daily flights to 336 destinations in 56 countries, serving 187 million customers – all under the banner of a rebranded American Airlines and parented by the new American Airlines Group.
But what happens to an airline’s culture and customer value proposition when it merges with another?
Let’s look at some other numbers from a recent Airfarewatchdog.com survey of more than 1,000 travelers. According to the survey results, American Airlines topped the list with 25% of passengers saying the carrier has the rudest personnel. Rounding off the top three rudest airlines was none other than US Airways, of which 12% of passengers felt that their employees were the rudest. This begs the question, if over one third of travelers consider these two airlines combined to have the rudest personnel, what type of customer service megaplex will spawn from this merger?
It’s funny how whenever airlines merge, their marketing department dust off the old post-deregulation playbook and run the trusty “bigger is better” maneuver. Iconic commercials remind us of a time when travel was glamorous. While back in the real world, travellers face dealing with the usual merger pains, on top of what may amount to another dreaded summer of delays exacerbated by climate change, outdated ATC, and FAA cutbacks.
Clearly, part of the reason why the largest airlines consistently rank highest on dissatisfaction lists is directly related to their legacy of mergers. Let’s face it; optimizing route networks and merging frequent flyer programs is a cakewalk compared to creating a sincerely unified brand. Mergers, no matter how well planned, always marginalize many employees through seniority restructuring and stressful work conditions. Frankly, it’s a miracle the Majors can deliver any acceptable level of customer service at all in such situations – a testament to just how good many airlines have become at reactionary management and short term execution.
American’s former holding company, AMR Corp, long after the airline’s glory days under CR Smith, executed a 31-year tactical campaign of acquiring airlines that were assimilated (kicking and screaming) into the AA brand and culture. Air Cal, Command Airways, Metroflight, Reno Air, Simmons Airlines, TWA, and Wings West Airlines, were all enveloped by AMR Corp.
US Airways’ previous acquisitions are nothing to scoff at either, including: PSA, Piedmont and most recently America West playing the power role and risk assumption. Employees of an airline may wear the same uniform, but their hearts and minds often retain allegiances back with their conquered entity.
Some insiders will admit that it’s not unusual to hear some US Airways employees distinguish themselves by pointing out their origins from another acquired airline. In fact the same happens at American and with other carriers belonging to what I refer to as the “Borg Collective”. It should come as no surprise when these vanquished employees clutch to their past identity and never really assimilate with their conquers’ culture.
How would you feel if your 25 years of seniority suddenly evaporated overnight? After years of paying your dues in the industry, not only were you on the bottom of the seniority list, but also you could be first in line to get the axe during tough times and in future mergers.
The bottom line is that mergers are an inevitable part of the airline industry. In fact the industry began transporting passengers after the merger of hundreds of small mail carriers in the 1930s. The business is also cyclical in many ways. Ironically before it was Allegheny Airlines, US Airways was called “All American Airlines” back it the carrier’s very early days. The numbers also serve to reassure us of the cost intensity of the airline business, with fuel, distribution, and labor topping the list. Perhaps airlines should treat labor costs more as an investment for their future rather than a burdensome line item; surely this is something that would benefit us all.