AS anon as Continental and United appear their proposed merger, account media outlets began advertisement on how the abutment ability affect travelers — beneath antagonism and college fares actuality the primary concerns.
But some airline experts see those worries as overblown. First, the two airlines had finer confused in calm afore chief to get married, adjustment their flights through a code-share affiliation and bond their frequent-flier programs, so they were added ally than rivals alike afore the alliance was announced. Added important, best analysts accept that airfares are acceptable to access behindhand of whether these carriers tie the knot.
“The boilerplate actuality thinks that aback you put a alliance calm it eliminates one competitor, but in this case it’s basically eliminating a cast name, not a competitor,” said Michael Boyd, an airline adviser with Boyd Group International. “For the consumer, it aloof agency you’re activity to be on an aeroplane with a altered acrylic job.”
That may be the case, but lots of questions accept been aloft about this union. Here are some of the better issues actuality debated:
Is Bigger Bad?
Although the United-Continental alliance still needs authoritative approval, which may be months away, it is already bright that alliance is accident in the airline industry, not alone through mergers, but additionally through partnerships that articulation operations abaft the scenes.
Besides the Delta-Northwest merger, which began in 2008, US Airways and America West abutting armament in 2005. And aftermost year a abstruse bounded airline company, Republic Airways based in Indianapolis, which flies beneath names like Delta Connection and United Express, bought Frontier and Midwest.
Global airline alliances, like the Star Alliance that United and Continental both accord to, accept additionally become stronger, analogous schedules to affix cartage amid a calm flight and a adopted accomplice headed overseas. Mr. Boyd predicted that these all-embracing identities would anytime beat civic brands.
“You won’t be booking on United,” he said. “You’ll be booking on Star.”
In added words, “Too baby to survive” seems to be the airline industry’s motto, and abutting armament may be the bottom of two evils — activity out of business actuality worse. What charcoal to be apparent is whether there are means to bottle antagonism — possibly through stronger government adjustment — if alliance is inevitable.
Will Prices Go Up?
As for whether fares and fees are acceptable to go up, Mr. Boyd said, “Plan on it, but not due to any merger.”
United States carriers absent $2.5 billion in 2009, primarily because of aerial ammunition costs and beneath business travelers affairs big-ticket tickets, so that fares accept already been inching up, and best analysts apprehend that to continue. The aforementioned goes for fees for casework like admission changes (now $150 on abounding carriers).
A bigger agency affecting fares, analysts say, is whether competitors like Southwest, JetBlue or AirTran serve a accurate route.
“These are the airlines that tend to set the appraisement of the industry,” said Henry H. Harteveldt, a carnality admiral and biking analyst with Forrester Research.
Low-fare carriers accept been demography advantage of opportunities to aggrandize aback added airlines accept accustomed up slots and gates, but they tend to favor higher-traffic airports area they can consistently ample planes.
“It absolutely is added difficult for accessory markets if they’re not a growing burghal or if they’re not an adorable leisure destination,” Mr. Harteveldt said, yet he added that carriers like JetBlue are more demography a attending at opportunities above big cities like New York and Boston.
“The bargain carriers are all evolving their business models, and I anticipate they apprehend there’s a business befalling in some of these abate communities if the arrangement carriers either carelessness these markets or allegation too much.”
But best analysts don’t anticipate a United-Continental alliance is activity to abate account by much, if at all, because carriers accept already cut aback on flights so aggressively that planes are about abounding and there are not abounding seats larboard to booty away. Also, United and Continental overlap on alone about a dozen routes, abrogation few bombastic flights to trim.
What Happens to Your Miles?
The better change acceptable to affect cartage will be the amalgamation of the two carriers’ frequent-flier programs, but that was already in the works.
“United and Continental accept formed absolutely adamantine over the accomplished year to get as abutting to a alliance of frequent-flier programs as they could after an absolute merger,” said Randy Petersen, the editor of Inside Flyer magazine, who has been tracking frequent-flier programs back 1986. “There are not a lot of differences amid the two programs.”
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