Airline industry and mergers, United and Continental to merge soon
United and Continental are on the verge of becoming partners and the news took the airline industry by storm. Many consumers are panicking as the move will result in higher airline ticket prices and lack of competition among the airline company will not give room for improvement in the airline industry.
Many experts belie that the ticket prices were likely to go up anyway even if the merger does not happen. The companies have been partners in their own way even before the plan for the merger was announced. The companies had linked their frequent flier list, giving consumers discounts.
“The average person thinks that when you put a merger together it eliminates one competitor, but in this case it’s basically eliminating a brand name, not a competitor,” said Michael Boyd of Boyd Group International. “For the consumer, it just means you’re going to be on an airplane with a different paint job.”
Mergers like the US Airways and America West in 2005, Delta-Northwest in 2008 and Republic Airways buying over Frontier and Midwest are the most recent and prominent mergers in the airline industry. Airline companies working together can be good, like the Star Alliance which many airline companies are a part of, including Continental and United, make the industry better as the companies work together and sync their work to get maximum efficiency.
“You won’t be booking on United,” Boyd said. “You’ll be booking on Star.”
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