What to expect from the Continental/United merger?

George Hobica, September 21, 2010
Fares from Washington DC:

    Q. Now that the Continental/United Airlines merger has been approved, what can I expect as a consumer? What will happen to my frequent flyer miles (Continental’s miles don’t expire in inactive accounts, but United’s do)? If I have membership in Continental’s Presidents Club will I automatically get membership in United’s Red Carpet Club? Will fares go up? How about fees? Am I right in assuming that mergers aren’t good news for us consumers?

    A: Let’s start with airfares. There have been dozens of mergers and failures in the airline industry over the last few decades, and yet airfares have actually gone down when adjusted for inflation. So on average, if fares go up as a result of this latest merger, then they won’t go up much. It’s a fact that when fares go up too much, passengers stay home or seek other means of transport, so the airlines will be careful.

    What we will see, however, are fewer unadvertised hit-and-run airfare reductions between the airlines’ hubs. We’ve been tracking these price wars for years at Airfarewatchdog.com, and some of them were pretty amazing, such as the time a few years ago when Delta reduced every single domestic fare from Continental’s hubs to $88 roundtrip, and Continental retaliated soon after with $128 roundtrip fares systemwide. That sort of thing won’t happen anymore. Now that Delta has merged with Northwest, those two airlines won't be battling each other; nor with US Air, with America West, nor Continental with United, nor Midwest with Frontier. And should US Air combline with, say, American, or American with AirTran (we're purely speculating here), then competition will be further reduced.

    And as more airlines merge, the news isn’t so good concerning fees. When there are many airlines to choose from, they tend to compete somewhat by offering different fee structures. With fewer airlines, there are fewer places to take your business if you’re trying to avoid fees.

    But don’t worry about your frequent flyer miles. In fact, the merger may be a plus in that regard, since if you have only 10,000 miles on United and 15,000 on Continental (neither amount worth a free ticket) now you’ll have a combined 25,000 miles, which will get you a free ride. However, usually in mergers, the more restrictive airlines’ policies apply, so we suspect that those miles will continue to expire, per United’s policy. And yes, you’ll now have access to both airlines’ airport clubs. 

    One positive development might be that if your flight is cancelled or delayed, now you’ll have a much larger route network to reschedule on. Pre-merger, if your flight from New York to Los Angeles, connecting in United’s Chicago, hub was delayed or cancelled, then United wouldn’t have tried getting you there via Continental’s Cleveland hub. But now that the two airlines are one, very big and (hopefully) happy family, you’ll have many more connection and rerouting possibilites through the combined airlines’ expanded hub network.

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