MIAMI— Henry Harteveldt is one of the travel industry’s most well-known and respected analysts and advisors. After nearly 12 years as Forrester Research’s travel industry analyst, Henry began Atmosphere Research to provide independent, objective, and trustworthy research on travel industry marketing, product, distribution, digital commerce, and future trends. Before becoming an analyst, Henry spent more than 15 years in marketing, planning, and distribution roles at TWA, Continental Airlines, Fairmont Hotels, and GetThere. Henry spoke with AirwaysNews about his vision on the integration of US Airways and American Airlines, and the future ahead for the carrier.
AirwaysNews (AWN): What are your thoughts on the legacy of the US Airways Brand, as it departs from the skies?
Henry Harteveldt (HH): I appreciate all the effort its employees have put into it and I respect AA CEO Doug Parker, AA COO Robert Isom and AA President Scott Kirby. They did the best they could with the hand that they were dealt. But US Airways was a utilitarian brand. It won’t be held in the high regard of the some carriers like Pan Am and TWA. Nor does it approach the regard of US Airways legacy brands such as PSA and Piedmont.
AWN: In your opinion, how have the merger, the integration and particularly the Computer Reservation Systems (CRS) been handled thus far?
HH: I take my hat off to the AA/US integration teams for the merger of the two companies. The leadership and employees are doing a very good job and it’s going well so far. I like the approach in strategy and execution. Two things will be critically important going forward: getting the labor groups together and secondly the integration of the CRS cutover. The Passenger Service System (PSS) cutover approach is very smart. I like the “draw-down” strategy, and the migration of US Airways to AA’s legacy Sabre system. They have clearly learned lessons from previous mergers. Additionally, it’s very smart that they not only created a US Airways User Interface (UI) on top of an existing AA platform, but also retaining American’s CIO Maya Leibman as Chief Information Officer (CIO) for the new American.
I believe that the Saturday cut-over day will go well, but there are always and will be hiccups. We saw this last weekend with Southwest’s service disruptions. This was an airline not currently involved in a merger, but the disruption shows airlines unfortunately can and do experience tech snafus. United and American Airlines have had recent tech disruptions as well.
AWN: With so much of the integration already in the rear view mirror and the fact that both airlines have been operating under an SOC (Single Operating Certificate) since April, what is the significance of the merger day?
HH: Cutover is the D-Day. Cutover day is the equivalent of performing a complex ballet for a dictator (the passengers) who will kill you if anything goes wrong. You give up your uniform and the new systems. It’s incredibly stressful and a very sad day for many (US) frontline employees. There are a number of things that can go wrong for employees on the frontline at the airport and reservations dealing with the cutover.
American has taken many steps to make integration day less traumatic for everyone, including running US Airways Express flights on the Sabre platform. For the interim, American has created a Graphic User Interface (GUI) for US Airways reservations and airport employees, so their new Sabre systems will look and function a lot like the old US Shares system. The cutover date [October 17] will also help American to lessen the impact of a potential event as it is a Saturday. It’s a slower time for travel and, importantly, more than a month before the Thanksgiving holiday. That will give the US Airways employees more than a month of experience using Sabre before the start of the holiday travel season.
Mergers are really hard. It’s not just about painting airplanes and signage. In this case, there seems to be a strategy to learn from the best of both sides.
AWN: What are the next milestones and changes you see post-merger day?
HH: The fun parts will begin after integration and continue into 2016. I expect it will be an exciting time. We may see changes in AAdvantage, American’s frequent flier program, its website, and its onboard product offerings, which have all had to be in semi-standstill modes. AA can take the gloves off as a competitor and a completely merged airline.
AWN: What changes could be coming to the new AA/US in terms of hubs and traffic?
HH: I don’t see Phoenix being drawn down that much. Phoenix offers exciting opportunities like long-haul, South America, Asia. Dallas/Ft. Worth is over-served. I am not sure that DFW will maintain its current capacity. Philadelphia will remain a hub. It will be interesting to see what AA does with New York JFK. They have the land to expand Terminal 8. American doesn’t necessarily want to win all of New York; they want to win what matters in New York. For American, that means the types of accounts and customers that represent a revenue premium, such as financial services, entertainment, and consulting. Unlike US Airways, American doesn’t have to compete for the low-yield, infrequent traveler to Florida.
AWN: Outside of the US Legacy Carriers, is this the end of the road for the Consolidation of US airlines, or are there further shoes to drop?
HH: There’s nothing imminent. I see mergers mainly taking place in the case of a failing carrier. Personally, I wouldn’t rule out a merger between Frontier and Spirit. What might make sense for American? Not Alaska. Seattle is too small.What might be more intriguing for AA would be Frontier, if and only if the price is right and market demand was strong. For that right price, Frontier might offer American a quick capacity boost, similar to what Reno Air offered American when those two merged in 1999. There’s more value for American in Denver than in Seattle [where AA code-shares with Alaska in the face of increased competition with Alaska’s “frienemy” Delta] because Denver is a growing, dynamic market and an omni-directional hub. I don’t see Delta wanting Alaska at this point – the atmosphere between the two is very poisonous, which would complicate putting the two carriers together.