Let’s not fly together: A customer perspective on the Continental-United merger

by Christopher Elliott on May 11, 2010


What’s in it for you?

Ever since the proposed merger between Continental Airlines and United Airlines was announced earlier this week, that’s all people have been asking about. How does this corporate marriage benefit me?

It would be easy to give you the answer everyone is expecting: It won’t.

But you deserve more than a smug one-liner.

Let’s look at what the airlines have to say. A hastily-posted merger website claims there’s plenty of benefit to customers.

• The combined airline says it will offer the world’s “most comprehensive network,” serving 144 million passengers per year and 370 destinations in 59 countries. But it fails to say how, exactly, bigger is better.

• The new United will be the world’s “leading” airline, according to the companies. It claims having more routes, a better frequent flier program and newer aircraft will make it a more desirable carrier. But these vague and tautological arguments don’t persuade me United will “lead” the airline industry anywhere.

• How about competitive fares? That’s code for cheap tickets, folks. By combining two airlines, Continental and United believe they will create a more competitive airline industry, which will lower fares. That’s just nonsense, of course. Show me one case in which a combined airline led to cheaper prices. Just one.

• A merged United is also said to offer “award-winning” customer service. Anne Munoz, Barbara Higgins — I love you both! But you’re already good. This isn’t a compelling argument for a merger.

• Finally, a consolidated United will have an “industry-leading” frequent flier program. Oh really? My personal feelings about loyalty programs aside, there’s absolutely no evidence that merging Mileage Plus and OnePass will benefit anyone. See today’s post on Delta-Northwest for more thoughts on that.

Continental and United have not made a single persuasive argument that their merger will benefit customers. Notaone. Instead, their list looks like an afterthought.

I’d like to believe that this isn’t driven by the financials, and that the executives who consummated this deal weren’t thinking about themselves first. And if their reasons were better, I might at least give them the benefit of the doubt.

I can’t do that.

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Tagged as: Continental Airlines, customers, merger, passengers, united airlines

  • Susan Malloch

    I know it probably sounds goofy, but I feel so disappointed, so let down, jilted by Continental. My husband and I have been loyal customers since the very beginning, flying a lot of miles over the years. It felt as if this were “our airline” — we saw some of the same agents whenever we were at the airport, knew the way it operated, etc. And after the merger, we’ll feel like strangers, I’m sure. And that’s just the emotional side of it. We’ll probably also feel the pain when it comes to paying for fares. I can’t imagine that the combined airline won’t take advantage of their near-monopoly in Cleveland and charge whatever they can get away with.

  • Jeff L

    I agree with everything you said, with one caveat. No, I don’t think prices will go down. More importantly, I don’t think they should.

    As an industry, the airlines cannot continue to sell a product for less than it costs to produce it. Without it’s fuel hedging advantage, even the discount leader Southwest is finding that out. One of the ways to do that is change the supply/demand curve by removing seats from inventory and a merger will do that.

  • John M

    While I agree with everything you said and what Jeff L. said with one caveat of my own. While mergers will reduce inventory, so would one change in our bankruptcy laws. Right now, airlines (or any number of companies) jump into bankruptcy, ditch their debt, offer lower fares to draw more customers and put undue pressure on those airlines that haven’t gone bankrupt. You know the ones that are paying their bills, like American, Southwest, Jet Blue, etc.

    If we were to adopt the European approach a number of airlines would have ceased to exist some time ago. In Europe, when an airline cannot meet its obligations, it is shut down and liquidated. That reduces the excess capacity without damaging the healthy carriers. And it is surprising how quickly new carriers fill the profitable niches created by the disappearance of the failed carrier.

    Yes, this is hard on the employees of the failed carrier, however it isn’t as bad as destroying all of the remaining airlines. That is what our system does, drags everyone down to the lowest common denominator.

    So there are other ways to reduce capacity beside merger mania, which does nothing for the consumer.

  • Frank

    John M May 11, 2010 at 2:48 pm
    If we were to adopt the European approach a number of airlines would have ceased to exist some time ago. In Europe, when an airline cannot meet its obligations, it is shut down and liquidated. That reduces the excess capacity without damaging the healthy carriers. And it is surprising how quickly new carriers fill the profitable niches created by the disappearance of the failed carrier.
    ====================================================

    What’s good for the airline industry should be GOOD for others. Example, the auto industry. So much for driving, American.

    ———————————————————————–

    Yes, this is hard on the employees of the failed carrier, however it isn’t as bad as destroying all of the remaining airlines.
    ==================================================

    Majority OF THE INDUSTRY (major airlines) went bankrupt, while several liquidated after 9-11. HUNDREDS went under in the 1980′s/90′s. Deregulation has caused this industry to become unhealthy. The “industry” is NOT profitable.

  • Frank

    Majority OF THE INDUSTRY (major airlines) went bankrupt, while several liquidated after 9-11.

    several “national” carriers.

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