United and Continental: Passengers Will Get Short End Of The Pillow

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.

More on MoneyWatch:

Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.
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    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.