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United-Continental Merger

United, Continental testify in Senate on merger

Marketplace Staff May 27, 2010

Continental and United CEOs are testifying before the Senate committee on the merger between Continental and United. The carriers will field questions from senators regarding costs. The companies insist they won’t raise ticket prices as the merged airline won’t be big enough to control fares.

Aviation analyst Allen Michel at Boston University says the new carrier will have an enormous amount of clout at key airports nationwide. “The merger is probably going to create an increased tendency to raise prices.”

Most industry analysts expect more mergers as the remaining big airlines respond to the new Continental-United deal. Aviation consultant Hubert Horan says history shows that consolidation doesn’t improve service or prices, but it has given the remaining airlines more control over lucrative routes. “You have just created too big to fail airlines that now have huge political influence.”

Horan says despite all the concerns about prices and competition, he doubts any senators will stand in the way of the merger.

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