United-Continental Merger – Will it Mean Higher Ticket Prices ?

FareCompare CEO, Rick Seaney, talks with CNN Money about what the Continental – United merger will mean to ticket prices for travelers (see also a more in depth airline merger analysis over the weekend)

  • Merger will take at least a year and likely closer to 2 years to fully integrate
  • The 500 U.S. cities with scheduled service that are NOT served by low cost carriers (LCC’s server about 100 cities) will likely see higher airfare prices in the long run as hike attempts will stick on them as opposed to larger more competitive cities
  • Not much change in the short run other than airline ticket prices are already going skyward off of last year’s decade lows – they have now where else to go up especially if oil prices continue to rise
  • International airline ticket prices are up 30-50% already this year again off of decade lows last year and with 3 major airlines controlling the vast majority of international flights in a couple of years (new United, Delta, American), there will be less incentive to discount in the long run
  • United and Continental have some difference in fee structures (Continental more resistant than United) that will have to be reconciled
  • Loyalty Frequent Flier Awards programs will have to be merged and “somebody’s going to get left out and there’s going to be a lot of gnashing of teeth over that” (a few that have miles on both will benefit by combining into one account)

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Published: May 3, 2010