ADTRAV Travel Management

United Airlines and Continental Airlines Announce Merger

United Airlines and Continenal Airlines announced plans for a definitive merger. The goal of the merger as specified in a press release from the two airlines is to “expanded access to an unparalleled global network serving 370 destinations around the world, enhanced long-term career prospects for employees, and a platform for improved profitability and sustainable long-term value for shareholders.”

The merger is expected to close near the end of 2010 and will reintroduce the new airline as United and will feature the logo, colors and livery of Continental. The combined company will also continue to provide service to all of the communities that Continental and United currently serve, which encompasses 370 destinations in 59 countries.

Will this merger result in higher airfares?

Anytime you lose a competitor in the marketplace it seems prices go higher. With the United/Continental merger it would only make sense that airfares would go up right? Don’t be so sure. With low cost carriers adding new major markets to their route structures, you may see prices remain the same or actually fall a bit. In order to remain competitive with the likes of Southwest and JetBlue, carriers like United will have to keep prices in line or risk losing valuable market share. Eighty percent of all US markets now have at least one low cost carrier that competes head to head with the “legacy” carriers. This competition keeps the airfares low in those markets. However, the legacy carriers offer certain perks and features that many of the low cost carriers just do not offer. Complimentary pre-assigned seating, robust frequent flyer programs and integrated scheduling and pricing to international destinations. The only looming issue that may affect airfares this summer is the cost of fuel. So goes the cost of fuel, so goes airfares.