Monday, March 11, 2013

Airline Clubs pre- and post-merger

The pending merger of American and US Airways will do more than combine the two carriers’ in-flight operations; it will also change the dynamics of the airlines' clubs in ways that will affect members of other airline clubs as well.
In addition to access to clubs operated by the named airline, all airline club memberships offer reciprocal privileges at clubs operated by other airlines, which are usually members of the same airline “alliance” such as the Star Alliance or oneworld Alliance. The pending merger will toss all the (membership) cards into the air, after which the airlines will have to resort the deck.

Officially, it’s too early to tell what will happen, Matt Miller of American’s media relations department told me in an e-mail.
“For now, we continue to operate independently as separate competitors and no significant changes will be made,” he said, noting that the companies expect the transaction to be completed in the third quarter of 2013.
That merger is conditioned on receiving several approvals, including U.S. Bankruptcy Court, US Airways shareholders, and other regulators including the U.S. Justice Department. Under the Hart-Scott-Rodino Act, mergers of the size of the American/US Airways deal must be submitted for review and receive approval before they can move forward.
“During the period between the signing and closing of the transaction, a transition-planning team of leaders from both companies will develop a carefully constructed integration plan to help assure a smooth and sustainable transition,” Miller said.
However, recent history can provide some pretty substantial clues about what is likely to transpire.
When United Airlines and Continental Airlines merged, they also combined United’s Red Carpet Clubs and Continental Presidents Clubs into what are now called The United ClubsSM.
One big difference between that union and the pending merger is reciprocity.
United Red Carpet Club members already had access to Continental Presidents Clubs and the other way around, so nothing changed but the names of the clubs and the uniforms of the non-airline personnel who worked in them.
Not so with members of American’s Admirals Clubs® and US Airways Clubs.
Right now, US Airways Club members enjoy reciprocal privileges with United Clubs, and vice versa. During a recent visit to a United Club, I was talking about this with a gentleman whose membership is with US Airways Clubs. He said US Airways Club members were told nothing would change regarding club access, but history -- and principles of business competition -- don't bear that out.

In my view, the reciprocal relationship is likely to be history post-merger because no major carrier that operates a club – not United, American, or Delta – offers access to the others’ clubs. The fourth major carrier, Southwest, doesn’t operate a club.
If history is repeated, Admirals Club members will enjoy access to more locations and US Airways Club members will lose a few, but the biggest losers will be members of The United Clubs.
Right now, American Airlines operates a total of 27 Admirals Clubs in the United States, and members also have access to three Board Room clubs operated by Alaska Airlines, for a total of 30. US Airways operates 19 US Airways Club locations in the United States, which will likely be combined with the Admirals Club as part of the merger, for a total of 49 domestic locations for Admirals Club members.
Such a merger would mean a net loss of five accessible locations for US Airways Club members, who currently also have access to 35 domestic United Clubs.
However, members of United Clubs, who today have access to a total of 54 United and US Airways Clubs will soon only have access to United Clubs, a net loss of the 19 US Airways locations.
In my view, that diminishes the value of a United Club membership by about 35%, though hell will probably have to freeze over before United considers reducing its annual fee.
Those changes aside, the combining of the clubs could be a good thing, at least for American passengers.  The products offered by Admirals Clubs and US Airways Clubs are already strikingly similar. I would expect that, with some modest adjustments, the combined benefits will likely be very similar to what they are today.
For example, both clubs offer “day passes” for $50, which can be used in as many clubs as your itinerary allows you to visit. American’s pass is good on the date issued and is available on-line only; US Airways is good for 24 hours from the time of first use and can be purchased for $29 on-line at the time of booking. By contrast, United Clubs offer a $50 “one-time” pass, which can only be used at a single club on the date of purchase.
All three carriers offer annual passes, of course. United’s is $500 for a standard membership plus a $50 initiation fee, American’s is $500 for a standard membership (discounted for higher-tier frequent fliers), and an annual US Airways Club standard membership is $450.
American and US Airways go United one better.
American offers a 30-day pass for $99, which the airline’s web site says offers “all the great benefits of our annual members, but is limited to only a consecutive 30 day period.” Because the price listed on the web site says the cost is $99 “per guest,” I called the Admirals Club help line and the agent confirmed 30-day passes include the ability to bring up to two guests. And, the agent offered, you don’t even have to be flying American.
US Airways offers a 90-day “trial membership” for $120, which also allows the holder to bring two guests, or spouse and children under 18.
Finally, there are ways to get annual club membership for less than the posted rates.
Chase Bank (NYSE:JPM), for example, offers the United MileagePlus® Club Card. As of today, its $395 annual fee includes club membership, a 50% bonus miles credits toward the holder’s United MileagePlus account, and no foreign transaction fees, which are typically 3% of the amount charged.
Citibank (NYSE:C) offers the AAdvantage® World EliteTM MasterCard®. Its $450 annual fee includes Admirals Club® membership privileges and enhanced mileage-earning opportunities, in addition to other benefits.

Research your options carefully if you’re a member of one of these clubs, and keep watching as events unfold.

American Airlines is owned by AMR Corporation (NYSE:AMR), while US Airways is owned by US Airways Group (NYSE:LCC).

Visit my main page at TheTravelPro.us for more news, reviews, and personal observations on the world of upmarket travel.



#NewAmerican

No comments:

Post a Comment

Comments on this website are moderated and will not appear automatically. They must pertain to the topic of the article and may be edited for content and/or clarity.