Airline Consolidation Could Shape Industry Reporting

If the merger between US Airways and America West Airlines goes through this fall, business reporters should be ready to tackle a new era of consolidation in the industry.

On Monday, the two airlines moved closer to consolidation, setting a shareholder meeting date and revealing a new stock symbol. In September, America West shareholders will vote on the merger and US Airways will have another bankruptcy hearing, where its creditors must approve of the merger.

With a union like this, consumers are likely to want to know how it will affect them.

"It's pretty simple. Customers want to know if their frequent flier miles will still be good, what will happen with fares, what cities will the airline be flying to and from, will they still be able to buy tickets at low prices," says Dan Fitzpatrick, airlines reporter for the Pittsburgh Post-Gazette.

Besides answering consumer-oriented questions, business reporters should look at how actions by individual airlines will affect the industry as a whole. By doing this, journalists may be able to present a story with some insight beyond today's headlines.

"The biggest impact (of the merger) will be a true challenger to Southwest Airlines," Fitzpatrick says.

The merger would create the nation's fifth-largest airline based on capacity, bumping Southwest Airlines from its spot as the nation's largest low-cost carrier. This puts pressure on Southwest, which has many flight overlaps with US Airways and America West. The competition and reduced expenses are likely to result in lower fares for consumers.

While it remains to be seen if this will push other airlines to consider consolidation, Fitzpatrick says that "this merger is an indication that there is an appetite for consolidation out there."

Many see consolidation as a way for airlines to recover from financial trouble. There may be a greater likelihood of carriers turning a profit if the supply of seats is reduced. However, Fitzpatrick points out history shows that the airlines don't use a lot of restraint and will flood the market with seats on routes of consolidating airlines.

Regardless, Fitzpatrick finds that his greatest challenge is boiling down an inherently complex airline story to something readable and interesting for readers. The first step is educating yourself on the intricacies and laws pertaining to the industry and story. From there, he says he just tries to tell a good story, complete with details and color. For instance, he took a recent look at why the merged company would choose L-C-C as its new stock ticker.

"It's certainly (realistic)," says Fitzpatrick, who often finds himself competing with the Wall Street Journal, the Washington Post and USA Today for airline stories. "It just takes some thinking, work and imagination."

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism