Political Hurdles Coming for the United and Continental Merger

May 11, 2010 at 2:46 PM | by Omri | Comment (1)

Continental Airlines has filed the required papers to make their airline merger with United official, so now the only things left are to dot the i's, cross the t's, go through the onerous process of getting government approval, and then go through the even more onerous process of physically combining the two fleets.

That last part is going to have to wait a while, since the House won't even get around to holding hearings until June, and those hearings promise to be kind of brutal for United and Continental.

What's behind the grumbling? Simply put: the inescapable, undeniable, basic fact that prices will increase as the newly merged airline sheds redundant routes. Surveys show that people are starting to realize that they're in for higher costs, and so Congresspeople have to make a show of being "tough." How much of a difference will all the posturing make? Absolutely none at all.

Congress doesn't get to decide whether specific airlines merge, which is probably a good thing since every time they get involved in the airline industry specifically, or in tourism more generally, they screw things up spectacularly. The final call is going to be made by government regulators, and presumably the monster lawyers that United and Continental employ don't think they'll have too many problems. The only thing that Congress can do is pass new regulations if they think that the current ones&151;the ones that eventually will allow the merger to go through—are inadequate. Which isn't going to happen during the crunch of an election year.

Any hearing, to say nothing of all the ominous-sounding sound bites about demanding answers, will be pure political theater. Airline executives who are bored will sit behind a table, Congresspeople who don't really understand the airline industry will sit in front of them, questions will be asked, answers will be given, and that'll be that.

[Photo: Kevin McCoy / Wiki Commons]

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Comment (1)

Return to » Political Hurdles Coming for the United and Continental Merger

Ticket prices will probably go up, but they had to. Adjusted for inflation, last year's ticket prices were the lowest they've ever been (I don't have a linkable source, I've read it several places though - likely Ask the Pilot). I flew Washington - Brussels roundtrip for $495 last May, booking only a week before my trip. Another friend flew Chicago - Brussels on the same dates for $510. United Airlines probably barely made a profit on me, or may have lost some money by flying me, considering that over half that money went to taxes or airport fees of some sort. Out of curiosity I checked the price again this year (on the same dates, checking kayak.com one week prior to the dates) and it was $1455 (with 9+ seats remaining). This was pre-merger. I don't see tickets from the East Coast to Europe going much higher than that because most people will not pay that amount.

From reading other news sites, it doesn't seem that prices will necessarily go up (at least domestically). They don't have any similar routes, except on routes from a Continental hub to a United Hub (i.e. Chicago-Houston) and from LAX to Honolulu, and it's doubtful that they really competed on those routes anyway since they're already partners. Internationally, I wouldn't be surprised if prices do go up, at least to Europe. I'm an airline enthusiast, not an airline industry expert at all, but just looking at the route maps, it seems that some consolidation will take place between Europe and North America. United barely has any presence in Latin America, and Continental barely has any presence in Asia.

I don't doubt that Congressmen/the feds will put up a fight since it'll make them seem like populists.

BTW, I'm not a United or Continental apologist. In fact, I hate most legacy carriers. I generally fly LCCs domestically, though since I live in DC, I tend to fly United to Europe.

Jaunted

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