How Will Passengers Fare In Latest Airline Merger?
STEVE INSKEEP, host:
United Airlines and Continental are searching for approval of their merger. This merger was not designed to raise air fares - at least according to Continental's CEO, who would run the combined airline. Still, some passengers fear that's exactly what will happen if the mega airline merger goes through. The deal now needs approval from anti-trust regulators.
NPR's David Schaper reports from Chicago.
DAVID SCHAPER: The $3.2 billion agreement to merge the operations of Continental and United would create the world's largest airline when measured by passenger traffic, surpassing Delta. The new combined airline, which would be named United, promises travelers 370 destinations in 59 countries. That's a reach that wouldn't be possible by either airline alone, especially given their enormous financial losses in recent years.
Delta's merger with Northwest in 2008 helped set the stage for this deal. Here's Continental CEO Jeff Smisek at Monday's merger announcement.
Mr. JEFF SMISEK (CEO, Continental Airlines): This is a brutality competitive industry. What we're doing today is making ourselves more competitive on a global scale, as this entire industry has globalized. This is not a merger predicated on increasing fares.
Professor AARON GELLMAN (Transportation and Management, Northwestern University): Consolidation inevitably raises prices.
SCHAPER: Aaron Gellman is a transportation and management professor at Northwestern University.
Prof. GELLMAN: I don't see that this merger is in the public interest.
SCHAPER: In addition to the possibility of airfares going up, Gellman and others say the consolidation could lead the new United to further reduced capacity, meaning fewer seats on fewer flights. That's a concern shared by some air travelers at United's hub at Chicago's O'Hare International Airport.
Frances Coletta is a food industry consultant from the Chicago suburb of Wheaton.
Ms. FRANCES COLETTA (Food Industry Consultant): The plane's already full. Every plane that's on, there's not one seat left. I am not a happy camper. I'm concerned what it's going to mean to me, because I fly quite a bit.
Mr. BRUCE KRAMER (Salesman): It's good and bad.
SCHAPER: Bruce Kramer is a salesman from Sterling, Illinois who says he flies on United almost every week.
Mr. KRAMER: It probably will help me get more flights from United, and it's - I like keeping my flights as much as possible to one airline because you get benefits as a frequent traveler.
SCHAPER: But Kramer is also worried the merger will increase his cost. Continental and United have been losing hundreds of millions of dollars in recent years, and the airlines say the merger is the best way to return to profitability. If that happens, then airline employees want to enjoy the spoils, too.
Captain Wendy Morse leads the United chapter of the Air Line Pilots Association.
Captain WENDY MORSE (Chairman, United Chapter, Air Line Pilots Association): You know, we've made sacrifices in the past. We've brought this day forward, and as a result of that, we certainly expect to share in the rewards.
SCHAPER: Other employee unions say they're working longer hours for less pay and have had their benefits cut, all to keep the airlines flying, especially at United. Unions of both airlines were in contract negotiations before the company started merger talks last month. Now the stakes are higher on both sides, but airline executives say they don't need union approval for the merger to close. They will need antitrust regulators and the Justice Department to sign off, though. And Brian Havel, an expert in aviation law at DePaul University in Chicago says that may be more difficult to get than when Delta and Northwest merged two years ago.
Professor BRIAN HAVEL (Aviation Law, DePaul University): There's going to be, from the Obama administration, a more vigorous enforcement policy than under the Bush administration.
SCHAPER: But Havel says the need for stronger U.S. airlines to match up against global competitors should trump concerns that there might be less competition domestically. Airline officials say they hope to get anti-trust approval so they can close the deal before the end of the year.
David Schaper, NPR News, Chicago.
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