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What United-Continental Merger May Mean for You

With United and Continental Airlines feeling the urge to merge and create what would be the world's biggest airline, the question that pops to mind is what the effect could be on the people who use them.

And the answer, according to CBS News Travel Editor Peter Greenberg, is reduced service and higher fares for the routes they both serve now - especially smaller destinations.

He told "Early Show" co-anchor Harry Smith Monday the two are essentially merging to - shrink.

"This new airline's gonna have ten hubs," Greenberg said. "It will fly to 370 destinations over 59 countries. It will take the third-largest carrier, United, merge it with the fifth-largest carrier, Continental, call it United, and it will become the largest carrier in the world. But, let me put this in perspective: The fact that it (would be) the largest carrier now doesn't mean it's gonna be the largest carrier (going forward). Every airline executive you will talk to will tell you the key to their survival lies in shrinking their airlines. So, we're gonna see some cuts" in the much larger carrier that the deal would create.

As for fares, "It's the law of supply and demand. Right now, they only compete on 13 long-haul routes, but it's the short-haul routes that make the difference here in smaller American communities. Take Bozeman, Mont., or Grand Rapids, Mich. -- a number of other destinations where both airlines service those communities, you're gonna see a reduction in service. It is inevitable."

And with such reductions, supply would decrease, presumably putting upward pressure on fares.

What about frequent flyer miles?

"Initially," Greenberg says, "nothing's gonna happen, because United and Continental already combine their frequent-flyer programs, because they're both members of the Star Alliance. However, availability is the key here. And if you've got fewer flights and fewer seats, that means fewer available frequent flyer awards. But this doesn't kick in until at least the fourth quarter this year. It's got a lot of hurdles to get over before it happens."

Hurdles including shareholder approval and that of federal antitrust watchdogs. Not to mention union cooperation.

Asked by Smith if retaining the United name would be wise, Greenberg responded, "It's interesting. It's a little confusing. It will be the United name, but the planes will be painted in Continental livery. They have a new motto called, 'Let's fly together.' I guess they will be for awhile!

"The bottom line is United doesn't have a stellar service reputation in terms of customer service. This is the airline that intentionally disconnected its customer complaint phone lines. So they've got some work to do."

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