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Airline merger may hurt hubs

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Kai Ryssdal: Elsewhere in the land of never-ending fallout, that volcano in Iceland hasn’t quite given up yet. Bad news for the hundreds of thousands of passengers who are still stranded on both sides of the Atlantic. Latest word is delays could last well into next week.

But it’s not just passengers who are stuck in a holding pattern. The business of aviation is causing its own delays. United Airlines and Continental are said to be in merger talks, which is backing things up a bit in Cleveland, Ohio.

Brett Neely has more.

Brett Neely: Cleveland is home to Continental’s third biggest hub after Houston and Newark. But if the merger goes through, Cleveland’s future may not be so bright.

Ned Hill is the dean of Cleveland State University’s College of Urban Affairs.

Ned Hill: Corporate headquarters are a very important part of the economic base of this region. And it’s not the Fortune 500 headquarters, it really is its closely held companies, its branches of bigger companies.

If the hub closes, he said it may be hard to retain some of those companies and to attract new ones.

Hill: Because business people don’t want to change planes.

Hubs are expensive for airlines to maintain. That’s why St. Louis, Pittsburgh and Cincinnati all lost theirs after big airline mergers. Now people flying in and out often have to take smaller regional jets to a bigger city and then change planes.

Bob Mann is an aviation consultant. He says airlines prefer to focus on richer cities that have the money to upgrade terminals and runways.

Bob Mann: Markets and hubs get the level of service that they’re willing to pay for.

There is one silver lining to losing hub status, says Allen Michel at Boston University. A major airline tends to dominate traffic at a hub. Now, there might be plenty of gates for low-cost airlines.

Allen Michel: It’s certainly conceivable that if it’s no longer a hub, their fares may drop.

But Cleveland State’s Ned Hill says as an economist, he sees a dark cloud in every silver lining.

Hill: To the average Clevelander, great! We can have a cheaper ticket to Orlando, but I may not have a job to pay for the ticket.

Until the merger is official, Hill doesn’t plan to give up his Continental frequent flier card.

I’m Brett Neely for Marketplace.

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