LOCAL ECONOMIC SNAPSHOT | AIRLINES

The bumpy ride in mergers

By TERRY MAXON
Airline Writer tmaxon@dallasnews.com

By TROY OXFORD
Staff Artist toxford@dallasnews.com

Despite the best efforts of their leadership, airlines usually encounter a period of turbulence after they merge forces with another air carrier. The number of reports of lost or damaged bags goes up. More ights are late. Unhappy customers pelt the airline and the U.S. Department of Transportation with complaints at a higher rate. Eventually, things get better. But its rocky for a while, for the airlines and their passengers.
The charts below show deviation from the industry average (0). The indicators are reports of bags lost per 1,000 passengers, complaints per 100,000 passengers and percentage of ights arriving at least 15 minutes late.

Delta Air Lines

Deltas customer service indicators were already low from its days in bankruptcy. After the merger with Northwest Airlines, they dropped even lower. Now its rate of complaints and bag reports are better than the industry average, and its on-time record for the past two years has been better than industry average.

US Airways
The low point after the September 2005 merger of US Airways and America West Airlines came in March 2007 when US Airways put both airlines reservations systems on the same computers. Now, though, US Airways is one of the betterperforming U.S. carriers.

United Airlines
United Airlines and Continental Airlines merged in October 2010 but didnt start ying as one airline until early 2012. Later that year, Uniteds rate of complaints per 100,000 passengers soared to 11.25 complaints per 100,000 vs. the industry average of 2.80. Exclude United that month, and the industry average dropped to 2.13.

Lost bags
4 3 Worse Merger

Lost bags
10 8 Worse 6 4 2 Better Merger

Lost bags
2 Worse 1 0 -1 Better -2 -3 United 02 bankruptcy Merger

2 1

Better

0 -1 -2 02 Delta bankruptcy

0 -2 -4 02 12

12

12

Complaints
2 Worse

Complaints
6 Worse 5 4 3 2 1 Better

Complaints
10 Worse Better 8 6 4 2 0 -2 02 12

1 0

Better

-1 -2 02 12

0 -1 02 12

Late ights
20 15 Worse

Late ights
20 Worse 15 10 5 0 Better

Late ights
30 Worse Better 20 10 0 -10 -20

10 5 0 -5

Better

-10 -15 -20 02 12

-5 -10 -15 02 12

02

12

SOURCE: U.S. Bureau of Transportation Statistics

The bottom line

I think most companies would be wise to merge on a measured basis and not make signicant change overnight. Its tough on the employees, and its also very confusing to the customers and potentially results in lousy customer service. Its just a very high-risk way to do it. Airline mergers are really difcult. The fact of the matter is we run 365 days a year, 24 hours a day. There is no shutdown. There is no break. We cant tell our customers, Hey, just take the day off. Well get back to you when were ready to start up. US Airways executives have put together a bible of everything they learned after the 2005 merger of US Airways and America West, and what theyve picked up by observing other mergers like the Delta-Northwest merger of 2008 and the UnitedContinental merger of 2010.

Gary Kelly, Southwest Airlines chairman and CEO

Robert Isom, US Airways executive president of operations

Terry Maxon, airline writer, The Dallas Morning News