If regulators approve the merger of
Mergers mean less competition, which generally leads to higher prices. "In the long run, I think it's fairly obvious that it's not incredibly wonderful for consumers," says
Pilarski says that the merger makes sense for the two airline companies because it's the best way for them to become more profitable and hopefully more efficient. The result, he says, will likely be that the new company will charge consumers more in order to make more money.
"There were times during the 1990s when you had six, strong, big legacy carriers, and they were all very happily coexisting with not-so-low fares," Belobaba says. "Study after study has shown that the No. 1 explanatory variable determining the availability of outrageously low fares is the presence or absence of one of the so-called low-cost carriers." The low-cost carriers he is referring to include Southwest, JetBlue, and
Belobaba says he believes consumers may have been spoiled in recent years. "It's kind of misleading to be talking about the fact that prices might go up for an industry that's lost
For patrons of either United or Continental, the merger creates a larger bank of frequent flier opportunities. "If you're a frequent flier program member, this is going the biggest one with the biggest networks hence the easiest one to earn miles," Mann says. United says customers will be able to use their miles for any flights on any other members of the
Consumers who have grown accustomed to cheap flights may have to realize that for the airline industry to exist, consolidation and price increase may be inevitable. "There's the prospect that this would stabilize the industry," Mann says. "That's probably good for consumers because the attraction of low fares is great, but on the other hand, the sustainability of the industry has been in question for about a decade."
By now you've seen the news that Continental and United airlines have agreed to merge. This isn't a done deal yet as this merger will get a close look by the Departments of Justice and Transportation, and anti-trust concerns could derail it. But most industry mavens believe the climate is right for this merger. And, I'd bet that the fallout for consumers will be more negative than positive
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