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New American Airlines CEO Says Company Will Be Stronger
Originally published on Tue December 10, 2013 10:45 am
MELISSA BLOCK, HOST:
It's ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
AUDIE CORNISH, HOST:
And I'm Audie Cornish.
(SOUNDBITE OF A BELL AND CHEERING)
CORNISH: The opening bell for the NASDAQ stock market was rung from Fort Worth, Texas, this morning at American Airlines headquarters. And with it finishes the formal merger between American Airlines and US Airways. The new company, American Airlines Group, is the world's largest airline. The merger faced some major hurdles along the way, most notably an antitrust lawsuit filed by the Justice Department, settled just last month.
So what does the merger mean for the flying public and the airline industry? Joining us now to talk about that is Doug Parker. He's CEO of the new American Airlines. Welcome to the program.
DOUG PARKER: Thank you very much. Happy to be here.
CORNISH: So first, we should say, for consumers, what kind of changes should they expect to see and how soon?
PARKER: Well, what this merger does for consumers is it creates an airline that can take people all around the globe, and to more places than either American could before or U.S. Airways could before. And we're excited about that. It creates a third competitor to United and Delta who were larger than American and U.S. Airways, and we think an airline that would be the greatest in the world.
CORNISH: But in August, Attorney General Eric Holder said of the merger it would result in consumers paying the price in higher airfares, higher fees and fewer choices. I know you've since settled with the Justice Department, but that initial assessment was pretty strong.
PARKER: Yes, it was. And fortunately we were able to work through with the Justice Department and explain to them what was really happening here. And what's really happening here is we're taking two airlines that are highly complimentary. We have over 900 routes between the two airlines but only 12 of those overlap. We intend to continue to serve all of the markets we serve, so we need all of the people and all of the airplanes that exist at the two airlines today. And what that means is, you know, prices will do what prices do based upon supply and demand, based upon fuel prices, for example.
But nothing about this merger changes - that, indeed, we're not taking any supply out. We're creating a stronger airline and overtime hopefully we'll grow that airline.
CORNISH: But, as you said, prices will do what prices do, meaning they could still go up.
PARKER: Yeah. But whatever they're going to do, this merger doesn't change that is the point. This merger keeps supply at the level it already was for the two airlines. And because of that, while prices may change they won't change as a result of this merger.
CORNISH: Now, public perception of your industry isn't good these days. I mean flying is not something most people really look forward to. And then we're in this era of extra fees, packed flights, is that going to change and, you know, how? How do you see it changing?
PARKER: Well, it's, you know, it's a difficult business, of course. But by having now three large global airlines where schedule, in all cases, are similar. That is people can be using the three to fly anywhere around the globe, you're going to see more and more emphasis on product. And I think airlines will be competing more and more on product, and less relying on schedules as we go forward. And it gets good for consumers.
CORNISH: And you said relying on product, I mean some people are wondering if there's anywhere else left to go in terms of fees and extra charges. I mean what else can you guys charge us for?
PARKER: Well, again, we need to make - we're doing what we can to make sure that we are able to cover the cost of providing the service - something the airlines haven't been able to do in the past. And one of the ways that happens is having those who use certain services pay for those services. I mean baggage is the best example. We know that, you know, that customer feedback initially on baggage fees wasn't positive.
But the reality is the customers that use that service drive a significant expense. And those that don't use it don't use those services. You know, there's all those tugs moving back and forth between airplanes connecting baggage, all the real estate that's outside of security, that is only there now to check someone's bag, all that exists for those who are checking bags. So it seems like a better model actually to charge those who are using those services than others, than trying to charge everyone the same amount even though some are using much different services.
CORNISH: I have a branding question. Southwest Airlines, for instance, is known as a quality low cost airline. Virgin America has a reputation for delivering a kind of hip, high-tech experience. How would you describe the new American brand?
PARKER: Yeah. Look, we are looking to build the greatest airline in the world, an airline that people want to fly...
CORNISH: That's a pretty tall order.
PARKER: Yeah, no kidding. I know. But I think we're up for it. We now have the largest network in the world, that helps. And we, you know, we have a new fleet coming that will give us the platform we need to go put in place a product, that is good or better than anyone else's out there. So, you know, what we will be able to provide, I think that others won't is the ability to fly anywhere throughout the world on the American network, or one of our co-share partners, and to do so with a product that is as good or better than anyone else's out there.
CORNISH: And lastly, the merger keeps the American name and American's headquarters in Texas but it's your US Airways team that's taking over at the top. How big of a challenge is it going to be to get these two operations and cultures to fit together?
PARKER: That's hard work and we know it. You know, putting two airlines together is always hard work. But we're ready for that work. We've taken a number of officers from both airlines and we're integrating those, so we have the best team in place in the airline business. And now it's just about going and executing.
CORNISH: Doug Parker is CEO of the new American Airlines. Thank you so much for speaking with us.
PARKER: Thank you very much. I appreciate it.
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