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United and Continental will probably merge

An agreement reached yesterday between the two American air carriers based in Chicago and Houston respectively, will probably result in an announcement later today, that Continental and United intend to merge into a single airline.  The parent company UAL Corporation, of which United Airlines is a wholly-owned subsidiary, will buy Continental.  The resulting airline will be called United and will be based in Chicago, United’s headquarters.  But it will eventually be run by Continental’s chief executive officer.

Just as with the Delta-Northwest merger initiated two years ago, this will probably be spun in a way that makes it seem like air travelers will benefit.  But residents of the Cincinnati, Ohio metropolitan area know better than that.  We have known for years that the reason Delta (even prior to its purchase of Northwest) has been able to charge such high fares for air travelers utilizing Cincinnati/Northern Kentucky International Airport (IATA: CVG; ICAO: KCVG) is because it held such a high percentage of the market share at the facility.  This was true even prior to Delta’s purchase of Northwest, which was completed earlier this year.  Routes along which United and Continental have always competed for business will almost certainly rise in price due to this deal, even though the two constituent airlines might claim otherwise.

The two airlines claim that this will allow another very large, American-based carrier to compete on an international scale, just as Delta claims it is now able to do.  Perhaps it will.  But it also means one fewer airline competing for the domestic market for air travel.  This may therefore permit other domestic airlines not involved in the deal to raise fares on certain routes as well.  A careful look at federal anti-trust law is expected before the deal is allowed by the Department of Justice.

Have you ever flown on either one of these two airlines?  What was it like?  The first time I ever flew United, three years ago, half the expected passengers no-showed, and the flight was cancelled.  I sat at Dayton International Airport (IATA: DAY; ICAO: KDAY) for six hours before being put on a US Airways plane.  But my return to Dayton on United was uneventful and quite peaceful actually.  I have never flown Continental.

What do you think about these airlines?  What do you think about this move?  Comments are welcome.

original story (New York Times)

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