The American merger with U.S. Airways is a Bad Idea

Endlessly repeating lies does not make them right, something that stock analysts and the press need to know about merger general and specific airline merger. So no, United merger with U.S. Airways much can not be expected to be a success by any measure. That is because, in the airline industry, as in many industries, size really does not matter for success, except perhaps negatively.Pick measure the performance of your choice, and see if it shows any relationship to the size. A prominent U.S. airline performance ranking Brent Bowen of Purdue and Dean Headly from Wichita State listed as the best airline in 2012: AirTran (AAI), Hawaii (HA), Jet Blue (JBLU), Frontier (frnt), Alaska ( ALK), Delta (DAL), Southwest (Luv), U.S. Airways (LCC), Skywest (SKYW), and American (AMR). States (UAL), keeping its excellent aforementioned problems of integration with Continental, ranked 12th. In general, the larger the airline, the lower the ranking. What about international? Measured by number of passengers carried, the top 10 list of the International Air Transport Association (IATA) containing not one of the top 10 Best Airlines World for the year 2012 as reported on the CNBC website, a list may include, in order, Qatar Airways, Asiana (020 560), Singapore (SIA), Cathay Pacific (293), All Nippon (9202), Etihad, Turkish, Arabic, Thai, and Malaysian.But cares about passengers obviously not most U.S. carriers. What about benefits? From the second quarter of 2011 the second quarter of 2012 (the latest period from the U.S. Department of Transportation), three of the four highest average margin received by the Alaska operation, Skywest, and JetBlue, which ranked 7, 8, and 9 in size. Same story with a unit cost-ExpressJet (XJT), JetBlue, and Airtran lowest.The simple fact is, as Gary Hamel commented years ago, is still zero plus zero equals zero. Or in the airline business, if you take one of the troubled airline and combine with the other, you will get a larger catastrophe.The problem is not a measure of economies of scale is not so important in many industries, not only airlines, and is any case the size is smaller than the large companies. The problem for airlines flying experience that causes people to want to drive for short trips and long trips to avoid if they can. It is not by chance that some of the most consistently profitable, such as Singapore and the country's international airline Southwest, continuous ranks high in customer satisfaction. As research Claes Fornell, founder of the American Customer Satisfaction Index, shows, customer satisfaction drives profits and shareholder-return.Maybe preoccupation with size because many stock analysts and aviation experts males. But the airline, like most industries, size does not matter. Integrating only increase market concentration, raise prices, and make customers worse.