This past week, the three major unions at Amer­i­can Air­lines agreed to sup­port a merger with US Air­ways Group, the par­ent com­pany of US Air­ways. This does not, of course, mean that a merger is def­i­nite, but it’s an impor­tant step on the way to com­bin­ing the two airlines.

It’s a remark­able twist in the his­tory of the United States air­line indus­try since dereg­u­la­tion, and most likely means that only a sin­gle major air­line will remain from the days before the 1978 deregulation.

Oh, sure, there are a hand­ful of famil­iar names painted on the sides of air­craft. But United was recently bought by Con­ti­nen­tal, who kept the more-​​familiar United name. And Con­ti­nen­tal itself was bought by Texas Inter­na­tional, a small regional player, in 1978. In terms of cor­po­rate her­itage, then, United is merely a renam­ing of Texas Inter­na­tional. Sim­i­larly, US Air­ways (for­merly known as USAir, and even ear­lier as Allegheny) was bought by Amer­ica West Air­lines in 2005; Amer­ica West was a child of dereg­u­la­tion, start­ing ser­vice in 1983. Only Delta and Amer­i­can of the old guard air­lines have “pure” lineage.

The route struc­tures of the two mesh fairly well, since American’s strengths lie in the east-​​west mar­kets cen­tered around the Chicago O’Hare and Dallas/​Fort Worth hubs, plus Cen­tral and South Amer­i­can mar­kets from Miami; while US Air­ways is con­cen­trated in the west at Phoenix, and in the east at Philadel­phia, Char­lotte, and Wash­ing­ton National. Amer­i­can also has a strong trans-​​Atlantic route net­work, which is one of the few some­what prof­itable areas of the old air­line mar­ket. A merger would give the Amer­i­can name more strength in the south­west (though would still be weak in the north­west), plus a bet­ter north-​​south route struc­ture in the east.

But the two air­lines have (for now) com­pletely incom­pat­i­ble fleets. US Air­ways is dom­i­nated by Air­bus nar­row­body air­craft, while Amer­i­can has no Air­bus air­craft in the fleet. Rather, Amer­i­can is pre­dom­i­nantly an aging fleet of McDonnell-​​Douglas MD-​​80s and Boe­ing 757s, plus a newer fleet of Boe­ing 737s. Amer­i­can has, how­ever, already ordered 260 Air­bus nar­row­body air­craft to replace many of the MD-​​80s and 757s, so the cor­po­rate fleet direc­tions are already convergent.

Amer­i­can built and main­tained its long dom­i­nance in the indus­try by excru­ci­at­ing atten­tion to rev­enue mar­gins. This man­i­fested itself in excep­tion­ally sophis­ti­cated mar­ket seg­men­ta­tion soft­ware (SAABRE), a huge loy­alty pro­gram (AAd­van­tage), and preda­tory mar­ket prac­tices. With those tools, Amer­i­can man­aged to weather sev­eral reces­sions, each of which van­quished one or more com­peti­tors. This last one, how­ever, led to a Chap­ter 11 reor­ga­ni­za­tion, American’s first. With that fil­ing, there are no longer any legacy car­ri­ers that have not filed for bankruptcy.

This his­tory dif­fers tremen­dously from US Airways’s his­tory. Amer­ica West was built on a model of start­ing from scratch, build­ing entirely new busi­ness mod­els with lit­tle regard for the industry’s past. In its early days, the air­line focused on cross-​​utilization, hav­ing every employee be trained in mul­ti­ple roles, so as to be more flex­i­ble in allo­ca­tion and cre­ate greater har­mony by ensur­ing that every employee has walked a mile in the moc­casins of the peo­ple with whom they had to inter­act. The goal was to reduce the “not my depart­ment” atti­tude that dom­i­nated at the legacy air­lines. At the same time, employ­ees were paid far lower salaries, but com­pen­sated with equity in the com­pany. Despite these inno­va­tions, Amer­ica West con­sis­tently lost money, and filed for bank­ruptcy in 1991, ren­der­ing all of the employ­ees’ stock worth­less. When Amer­ica West finally emerged from bank­ruptcy in 1994, it had become an entirely dif­fer­ent air­line — lean and mean, which enabled it to be the first air­line to sur­vive a head-​​to-​​head com­pe­ti­tion with South­west Air­lines. In the merger with US Air­ways, the Amer­ica West busi­ness model survived.

Thus, the great­est dif­fer­ences between the two air­lines lie in the cor­po­rate cul­ture. Amer­i­can is the clas­sic old-​​guard, depend­ing on higher rev­enues per avail­able seat-​​mile, while US Air­ways is much more focused on the cost side of the ledger. American’s employ­ees will have a very hard time adapt­ing, and so will American’s cus­tomers, who have become accus­tomed to a higher grade of ser­vice than the one pro­vided by US Air­ways. It’s unlikely that this merger, if it hap­pens at all, will go smoothly for anyone.

Rest in peace: US air­lines of years past

And what about the domes­tic air­line indus­try? On a national scale, we’ll be down to United, Delta, and Amer­i­can as the only nation­wide clas­sic air­lines. In the past ten years, we’ve lost half of the remain­ing clas­sic names: TWA, North­west, and Con­ti­nen­tal. A sim­i­lar cut over the next decade would leave us with two, or maybe just one.

Don’t get me wrong. I’m not wor­ried that we will have a sin­gle air­line. We’ll still have plenty of com­pe­ti­tion. Domes­ti­cally, we’ll get to choose South­west, or Alaska, or Jet­Blue, or Fron­tier, or Vir­gin Amer­ica. Inter­na­tion­ally, we’ll be able to choose Air France, or Sin­ga­pore Air­lines, or JAL, or SAS. But it’s sad to see the behe­moths of yes­ter­year fade away.

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