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How Would an American Airlines/U.S. Airways Merger Change the Way You Travel?

By Robert Firpo-Cappiello
August 16, 2013
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Yup, the airlines just keep on changing names. More than a decade of bankruptcies and mergers has left us with a smaller field of competitors—we had 10 major carriers in the United States in 2000, now we have five—and the familiar brand names are disappearing or getting hyphen-happy. Northwest? It's now part of Delta. Continental? That's United-Continental to you.

So, when American Airlines and U.S. Airways announced a proposed $11 billion merger in February, many industry folks expected it to be the last, somewhat inevitable, merger, creating the world's largest commercial airline and allowing American to emerge from bankruptcy with renewed clout. Not so fast, the Department of Justice declared on August 13. Or, rather, "The American people deserve better," as Attorney General Eric Holder put it when he announced the department's antitrust action against the merger.

The DOJ maintains that combining American and U.S. Airways would reduce competition, leading to higher airfares, higher fees, and fewer choices for consumers. Its announcement was such a surprise, lawyers for American and U.S. Airways took the unusual step of meeting with reporters to publicly refute the DOJ's major contentions. In fact, the lawyers leading the merger declared emphatically that merging the fourth and fifth largest commercial air carriers in the U.S. would actually enhance competition and lead to lower fares because it would create a new, powerful competitor to rivals Delta and United-Continental.

Hmmm. What gives? While we don't have a crystal ball to predict whether this merger would change the way you fly, Budget Travel has always preferred solid research to intuition. So we took a look at some evidence from the most recent airline mega-mergers and asked the obvious question: Did those mergers enhance competition and help bring down airfares?

Nice try. In 2008, Delta merged with Northwest. In 2012, the American Antitrust Institute analyzed airfares on routes and hubs affected by that merger and found above-average fare increases on 70 percent of routes, with fare increases up to 20 percent. In 2010, United merged with Continental. Similarly, the AAI found above-average fare increases on 90 percent of affected routes, with fare increases up to 30 percent. Both mergers limited competition on affected routes and at affected hubs and drove some local airlines and lower-cost airlines out of those hubs.

The AAI's findings would tend to support the DOJ's position. As just one example, the DOJ contends that, if this merger goes through, 69 percent of the takeoff and landing slots at Reagan National Airport in Washington, D.C., would be controlled by the new American/U.S. Airways entity, and that the low fares offered by JetBlue out of National could be threatened because JetBlue's slots at the airport are the result of an earlier agreement with American Airlines. Further, U.S. Airways currently offers lower fares to passengers who fly through some of its smaller, non-hub airports. The new mega-airline created by the merger—in control of more flights and more hub slots across the U.S.—might very well have less incentive to offer those discounted fares.

Will American and U.S. Airways merge? Will fares rise? We don't know. We must acknowledge that airfares alone may not be the most important factor in whether the merger ultimately goes through. Let's remember how thin the airlines' profit margins are: The Wall Street Journal's Scott McCartney recently reported that on a plane with 100 passengers, less than one airfare goes to the airline as profit; the rest pays for fuel, equipment, and staff. The consolidation of the past decade may have been, as Senator Jay Rockefeller of West Virginia has said, a "necessary evil" to bolster an industry facing multiple bankruptcies. Of course we're rooting for the consumers—you—in this case. But time will tell whether American Airlines and U.S. Airways can best serve consumers by remaining separate entities or becoming one big one.

TALK TO US! Did the Delta-Northwest or United-Continental mergers change the way you fly?

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How to Plan the Perfect Dude Ranch Vacation

Darley Newman is the five-time Daytime Emmy Award nominated host, writer, and producer of the lifestyle travel TV series Equitrekking, which broadcasts on PBS and international networks in over 82 countries. Interested in taking an all-American dude ranch vacation? As someone who's taken a lot of them, including girlfriend getaways, family escapes, and wilderness adventures while filming my PBS TV show Equitrekking, I can tell you that there are a variety of diverse choices. While many ranches promote a casual, relaxed atmosphere, others offer luxury with top amenities. While some modern ranches cater to foodies and offer gourmet fare, others deliver cookouts and cowboy singers. Ranch vacations can make for a stress-free, wallet-friendly and family-friendly vacation. Here are five travel tips to help you plan your ranch escape and pick the right ranch vacation for you. Pick your ranch styleIn thinking about your dream ranch vacation, decide what best suits your goals and tastes. Are you seeking an authentic Western experience on a dude ranch vacation, a working cattle ranch where you can play cowboy, or a luxury ranch resort complete with a fitness center and spa? Do you want an intimate, boutique setting or larger numbers of guests to perhaps serve as a buffer for the rest of your group? Decide up front on ranch activities and amenitiesMany guest ranches offer a surprising array of special activities either onsite or nearby such as whitewater rafting, fly-fishing, mountain biking, cooking classes, spa treatments, square dancing, horse pack trips, local sightseeing, and often have children's programs—a built-in, stellar babysitting tool. If there's a particular activity or amenity you're seeking, this can be a good way to narrow your search. Having so many pre-planned activities can often take some stress out of the trip because you don't have the pressure of planning everything for your group. Addicted to the Web or need cell reception? Keep in mind that some ranches are off the grid, meaning you'll be staying in a technology-free environment. This can be a great way to unplug from our interconnected world and enhance your family or group bonding. Run the numbersMany dude ranches are all-inclusive, so if you are getting initial sticker shock from the week's pricing, do the math. Consider that all meals, activities, lodging and even some alcohol can be included, meaning you know almost all of your expenses up front. You'll need to add in flights and transportation to and from the ranch, as while some ranches offer free airport shuttle service, you'll need to rent a car for others. Consider that you will need to tip at many ranches, which could add 10 to 20 percent more to your tab. Search the ranch website, email, or call the destinations you are considering to find out what's included, so you can create a budget and stick to it for your ranch vacation. Check out ranch planning resources There are a lot of great ranch escapes, so enjoy exploring and getting ready to saddle up and ride the range! Here are some trusted ranch vacation resources to help you narrow your search: • Equitrekking.com. The companion website to the Emmy-winning PBS TV show offers Ranch Travel Deals, the Equitrekking Vacation Guide to great ranches and horseback riding vacations, and Dude Ranch Blogs. • Dude Ranchers Associations. The Dude Ranchers' Association has been helping travelers choose Western vacations since 1926 and offers great ranch planning resources. If you've narrowed it down to a state, check out the Colorado Dude & Guest Ranch Association, Arizona Dude Ranch Association or Wyoming Dude Ranch Association. • Top20Ranches.com. This website features 20 of the best North American dude and guest ranches. Enjoy the ranch search As someone who likes simply looking at travel destinations, I ask that you, too, enjoy the search and that you search in a variety of ways. There are great resources online, but don't judge a ranch by its website. Search multiple places, read online guides and reviews and if you can, ask around. A personal referral from a trusted source is always a good idea.

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Inspiration

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Inspiration

What's Cookin' in Music City?

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