A few days after the two-year anniversary of the Delta Air Lines and Northwest Airlines merger being approved, United Airlines and Continental Airlines will sign the closure papers on their merger on the 1st of October.
Once United and Continental finalize their merger details and sign the closure papers they will eclipse Delta Air Lines and become the largest airline in the world … narrowly beating Delta’s fleet of 691mainline aircraft to create an airline of 706 mainline aircraft … the largest airline in the world in terms of both fleet and destinations served.
There are countless news stories detailing the clash of business styles and corporate cultures between the two companies. Many journalists are constantly discussing how “The New United Airlines” is forecast to generate an estimated US$900-million more per year in revenue and save an estimated US$300-million annually in operating costs. With all the news stories regarding the merger, something that does not seem to be discussed in is how the route structures of United Airlines and Continental Airlines will impact the traveling public … or more to the point … how it won’t impact the traveling public.
There are countless blog posts and a seemingly endless stream of comments, Twitter Tweets and Facebook commentaries, discussing how a merged United Airlines and Continental Airlines will increase fares and reduce flight options for passengers. Despite “The New United Airlines” flying to 370 destinations in 59 countries, the actual routes each airlines flies are quite different, and it is the differences in markets served by each airline that allow the airlines to compliment each other’s route networks
In fact … out of the 370 destinations and 59 countries the combined United Airlines and Continental Airlines serve, the two airlines only overlap on a total of 14 routes within the United States and do not compete head-to-head on any international routes.
In addition to the fears that the combined airlines would slash routes and reduce competition among airlines and drive up fares, the route structure of the merged airlines will face competition from other airlines, including low-cost -carriers, on 76% of its existing non-stop routes. Of the remaining 24% of routes that do not face direct non-stop competition from competing airlines, the vast majority of those routes face competition from competing airlines serving the destinations with indirect service.
So despite the third and fourth largest airlines in the United States merging to create the largest airline in the world, there will still be plenty of competition to keep fares from increasing due to a monopoly on route and passengers will still have the chance to seek out competing carriers to get them where they are going.
As the two airlines get past their corporate culture issues and sort out their branding issues … which I discussed here – United & Continental Airlines Merger & The New Airline Branding … the big issue is this …
… which frequent flyer program will prevail? Personally … I hope they shred them both and start from scratch. Both programs have advantages and disadvantages and the airline has the opportunity to start over again and come at passenger loyalty from a whole new vantage point.