This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
Full disclosure: at nearly six feet tall with a bad back, I really HATE to fly. I know that I'm not alone-just look at everyone around you in a airport. There's hardly an industry that comes to mind where almost everyone in the process is dissatisfied.
So when I saw the news of the UAL-Continental merger, I thought: this is probably good for the two companies and lousy for the rest of us. I discussed the implication of the merger for passengers with CBS3 this morning.
In essence, here's why the merger works for them:
- Being #1: Combined, UAL/Continental would be the largest airline, with 21% of domestic capacity
- Two Losers Make One Winner?: Between them, UAL and Continental have filed for bankruptcy 3 times in 3 year and last year, Continental LOST $282M and United LOST $651M. (The other biggies aren't doing much better-over the past 5 years, Delta, United, American, Continental and US Air have lost $29 BILLION combined.) The thinking is that a marriage would allow these two to shed a bunch of expenses (mergers usually lead to job cuts) and maybe, just maybe, turn a profit.
Here's how the passengers are likely to get short shrift:
- Fewer airlines means less competition and likely, higher ticket prices
- Less Availability: the duplication of routes will reduce passenger options
- Fewer amenities: We really hate your lousy food, but we know that we are the big losers when you are generating nearly $8 billion in extra fees
Tune out the CEO promises-any way you slice it, passengers will get the short end of the pillow on this mega-merger.
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