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New American Airlines CEO vows to make merger work
Q&A » Doug Parker weighs challenges and a range of concerns, including ticket pricing and competition.
First Published Dec 09 2013 09:09 am • Last Updated Dec 09 2013 05:34 pm

Forth Worth, Texas • American Airlines and US Airways seem an unlikely couple, even to the man who will lead the combined company after their merger on Monday.

Doug Parker says, however, that American’s buttoned-down, corporate culture will be the perfect complement to his scrappy US Airways, where "we sometimes fire before we’re ready."

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At his spartan, temporary office in American’s Fort Worth headquarters, the longtime US Airways CEO sat down for a wide-ranging interview with The Associated Press.

Parker talked about the merger, the government’s attempt to block the deal, looming competition from foreign airlines, and the public’s perception of air travel. The answers have been edited for length and clarity.

Do you see a gap widening between people in first- or business-class and leisure travelers in the back of the plane?

No, I don’t necessarily. You described it as the front versus the back, and the reality is all the seats in coach are not the same, and customers prefer certain ones over others and are willing to pay more either through loyalty or just paying more for a ticket in order to get a better seat in the coach cabin.

I don’t see a gap in first versus coach as being a major change going forward.

What are your biggest challenges in making this merger work?

It’s two complex organizations that need to be melded into one over time. That’s the biggest challenge by far. It’s not easy, but we have people that have done it before — both airlines have been through a merger in the semi-recent past. We have consultants on board who’ve done this with other carriers, so we’ll learn from what we’ve seen at others as well as what we’ve seen ourselves.

Were Justice Department officials right when they said the merger would cause prices to rise?

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Airline prices are like prices in other businesses — they track with supply and demand, and we’re not reducing any of the supply. Prices may change because demand changes, or they could change for any number of factors like costs going up, but this merger shouldn’t have an impact on prices one way or another because we’re not taking out any seats.

Will you still compete chiefly on price?

We know that something around 25 percent of our customers will go to the lowest price irrespective of time or inconvenience. In a low-margin business like ours, you can’t give up 25 percent of your customers, so we have to match on price.

What’s the new American’s frequent-flier program going to look like?

Nothing yet to announce. What we do know is this: Customers immediately will be able to combine their miles and use their miles to fly on a larger network.

Would you raise the number of miles needed to earn a trip, or change to a point system?

I don’t know. It’s going to be important to compete on the in-flight product, it’s going to be important to compete for frequent fliers, who will have now three real options to travel around the world.

Are you worried about competition from the fast-growing Middle Eastern carriers?

They’re a real threat. This is a global business and one where we have to compete globally. We can’t ignore any global threat and we can’t be asked to compete on different terms.

Do you mean the U.S. subsidies for foreign airlines that buy Boeing planes?

That’s one thing. There are a number of areas — their (lower) taxation versus the taxation the U.S. government puts on U.S. carriers; the access they’re getting (to closed markets).

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