Beware Another American Airlines Reservations Breakdown

Airplane, dusk
Airplane, dusk

The breakdown of the reservations system of AMR, parent of American Airlines, will not be the last for the company. Carrier mergers are notorious for the customer disruption they cause. As American marries U.S. Airways Group Inc. (NYSE: LCC), the likelihood of more reservations catastrophes grows.

The most recent two huge mergers of U.S. carriers offer evidence that the recent American reservations debacle and other customer trouble will happen again.

The New York Times reported in mid-2011 that the Delta Air Lines Inc. (NYSE: DAL) buyout of Northwest created a customer disaster:

The airline had the worst record among large carriers for on-time arrivals last year, and it accounted for a third of all customer complaints, the worst of any airline, for categories like service and lost bags, according to the Transportation Department.

And Independent wrote about airline reservations systems:

The problems associated with merging the reservations systems of Delta and Northwest, and to an even greater degree United and Continental, were covered extensively in the travel press.

The United merger with Continental that created United Continental Holdings Inc. (NYSE: UAL) also showed how mergers can cause reservations system issues. The New York Times reported in its assessment of the recent American Air reservation system collapse:

Such nationwide breakdowns are rare but not unprecedented, particularly when airlines merge. United Airlines experienced similar problems last year when its reservation systems failed repeatedly as it merged them with those of Continental Airlines.

If a bankrupt AMR cannot maintain its own reservation system properly, it is easy to imagine how the same system could trigger similar problems, or even worse.

There are several things fliers can virtually bank on. Mergers cause a number of predictable events. Among them are layoffs, higher ticket prices, lower customer service standards and broken frequent flier systems. But at the top of the list is the most critical aspect of travel, as far as the passenger is concerned. Can he book a seat, get on the plane on which it is booked and actually take off to his destination?

Filed under: 24/7 Wall St. Wire, Airlines, Mergers & Acquisitions Tagged: DAL, featured, LCC