Let’s not fly together: A customer perspective on the Continental-United merger


What’s in it for you?

Ever since the proposed merger between Continental Airlines and United Airlines was announced earlier this week, that’s all people have been asking about. How does this corporate marriage benefit me?

It would be easy to give you the answer everyone is expecting: It won’t.

But you deserve more than a smug one-liner.

Let’s look at what the airlines have to say. A hastily-posted merger website claims there’s plenty of benefit to customers.

• The combined airline says it will offer the world’s “most comprehensive network,” serving 144 million passengers per year and 370 destinations in 59 countries. But it fails to say how, exactly, bigger is better.

• The new United will be the world’s “leading” airline, according to the companies. It claims having more routes, a better frequent flier program and newer aircraft will make it a more desirable carrier. But these vague and tautological arguments don’t persuade me United will “lead” the airline industry anywhere.

• How about competitive fares? That’s code for cheap tickets, folks. By combining two airlines, Continental and United believe they will create a more competitive airline industry, which will lower fares. That’s just nonsense, of course. Show me one case in which a combined airline led to cheaper prices. Just one.

• A merged United is also said to offer “award-winning” customer service. Anne Munoz, Barbara Higgins — I love you both! But you’re already good. This isn’t a compelling argument for a merger.

• Finally, a consolidated United will have an “industry-leading” frequent flier program. Oh really? My personal feelings about loyalty programs aside, there’s absolutely no evidence that merging Mileage Plus and OnePass will benefit anyone. See today’s post on Delta-Northwest for more thoughts on that.

Continental and United have not made a single persuasive argument that their merger will benefit customers. Notaone. Instead, their list looks like an afterthought.

I’d like to believe that this isn’t entirely driven by the financials, and that the executives who proposed this deal weren’t thinking about themselves first. And if their reasons were better, I might at least give them the benefit of the doubt.

I can’t do that.

  • Charla

    The only benefit to customers I can see is that United will now fly to more locations. However I discovered today on United’s website that they will now start charging $50 to stand-by for a different flight on the same day for tickets purchased after April 10, 2010. I’m very disappointed to learn this, United’s policy used to be you could stand by for an earlier flight for free that departed on the same day as your original flight.

  • Sean

    Good points Chris.

    I feel this merger is one in part due to panic. It seems that United was desperately looking for a dance partner, as they jumped from US Airways to Continental in a matter of weeks. I saw comments that during the US Airways-United talks, that Continental would be “left out” of all the mergers . . . would that be a bad thing? Now I’ve read articles where people are already speculating an AA/US Airways merger . . . where does that make much sense, other then just because everyone else is doing it.

    This merger was apparent from the initial discussions about Continental moving into the Star Alliance and slowly Continental changed it’s policies to mimic more and more of United (no food service, billing for “extra leg room” , etc.)

  • SirWired

    I’m absolutely positive that this was driven by the financials and that it will lead to higher airfares. Given that the entire airline industry is collectively a horrid black hole into which capital disappears, never to be seen again, it is obvious that they want to remove competition and raise prices. After all, they can’t figure out a way to make money any other way. When you combine greedy management not acting in the interest of customers/stockholders/employees, hostile labor relations, justifiably surly employees, awful customer service, price-sensitive customers, and a complete inability to figure out fuel hedging, the idea of raising prices by removing competition is about the only thing left.

  • eCurmudgeon

    I will support the United/Continental merger on one condition: That the Feds bring back Airline Regulation and the Civil Aeronautics Board along with it.

    With the possible (“possible”) exception of Southwest, the only thing deregulation did was cause airlines to hemorrhage money and drop customer service to zero. Bringing regulation back would immediately end the race to the bottom, and allow the airlines to focus on customer service once again as a differentiating factor…

  • Carver

    @eCurmudgeon

    Of course, the flip side is that fares will increase to the point where the average American can only afford to take one round trip flight a year.

  • Logan

    I have personally found Continental’s experience to be far superior to most every other airline (aside from the fact that their hub is in New Jersey – but I digress).
    Everything I’ve heard about United has been that the aircraft are aging, the service is poor, and it’s generally not an airline anyone *wants* to be on.
    I’d like these airlines to stay separate for the sake of Continental. Of the “legacy” carries, it’s one of the youngest (especially as a question of fleet age) and tends to provide a level of service that outstrips most of its competitors.

  • Adrian

    These are huge corporations who have absolutely no reason to act other than based on financials. Companies don’t exist to give anyone warm feelings or even to provide a service; these companies exist to turn a profit. Obviously, the impact on a random consumer may be not be positive, but for the purposes of these companies that is irrelevant. Since when has anyone had any reason to suspect a corporation is a friend, charity or public service? That would actually be neglecting their duties to shareholders. You might have expected them to list benefits that might help certain consumers as they did. It is unfortunate if Chris or anyone else disagrees that it benefits anyone, but I can tell you a more viable and healthy airline industry benefits every United States citizen. Airlines (and their abilities to survive) are essential to our national economic survival.

  • Marc

    Like @Logan, I too find that Continental is far superior to United (and just like he said, it’s regardless of their presence in Newark, NJ).

    However, I have both OnePass miles and MileagePlus miles and trolling around the unitedcontinentalmerger.com web site, I was curious to see if they mentioned what would happen to people who had both accounts like I do. I found my answer. Sort of.

    “Our OnePass and Mileage Plus programs will continue to operate independently until the merger closes. Miles in both programs continue to be valid and are able to be used according to existing program rules. The new frequent flyer program will blend valuable features of OnePass and Mileage Plus from United and Continental. ”

    Notice it doesn’t say that your miles will actually be combined, even though the question on the FAQ page explicitly states “Do I have to use all of my miles before the merger is completed or risk losing them? Can I combine them now?”

    Personally, I’m indifferent to the merger but I sure as heck would like to know what happens to all those miles I have in both accounts.

  • Mike

    Continental’s customer service, which used to pretty good, has gone downhill to meet its new partner’s level, based on what I’ve had to deal with when flying Continental lately, so much so I sent them my OnePass Card cut up into little pieces as a statement.

    Here’s hoping that the Justice Department or whoever decides on these things doesn’t approve this merger AND brings back Airline Regulation.

  • Cosmos Human

    I’d like to see a real price break on the CLE-EWR flights. Catching a flight across the pond is getting pretty pricy these days. Bring back the CO CLE-London routes…..a wish I’d like granted (twitches nose).

  • Zach

    @Adrian — thank you.

    @Charla — the reason this fee is implemented is as follows: You want to buy a ticket Chicago-Boston for tomorrow, but the 5:30pm flight costs $1000 (because it’s the flight in highest demand/it is the most full). However, the 9pm flight is only $300 (because there is no demand there), so you buy that cheaper ticket then go stand by for the 5:30pm. Standbys add operational cost (more time spent working the flight for the CS agent, more bags that weren’t expected if they have to be gate checked, etc), and if you go to a restaurant and order a hamburger, just because someone else ordered a steak but had to leave before they ate it doesn’t mean you should get a free steak instead.

  • Zach

    Chris, I’m very disappointed in your article. Usually you have a fairly even keeled view on things, but you’re really pushing things out of perspective here.

  • David

    @ Adrian… Well Said!

  • Steve Surjaputra

    Let’s just hope that United/Continental will do a better job with Taylor guitars or else Dave Carroll will have to make three more videos.

  • Allen

    Travel every week. Continental , while not great , is far superior to United. Anytime I have to take United (only when no other options are available) – I just try to get through it with my sanity intact. I fear Continental will now be dragged down to United’s level.

  • MVFlyer

    “I’d like to believe that this isn’t driven by the financials, and that the executives who consummated this deal weren’t thinking about themselves first.”

    It is driven by financials–that is the job of the CEOs, to please their shareholders and bring more value to their portfolios. But there is some person gain on their parts as well–UA’s CEO, Glenn Tilton, is not known to be an altruistic type–he is generally reviled by his employees–and he knew that UA on its own wouldn’t survive. He needs to protect his golden parachute.

  • Charla

    @Zach I understand your reasoning. However I have to disagree. My mother is a flight attendant and I flew non-revenue stand by until my 26th birthday. I have rarely seen a flight where there are not at least 1-2 non-revenue stand bys (i.e. employees). This fee is not going to get rid of stand bys or even reduce the number of stand bys. I suspect that all this fee will do is drive down the number of revenue stand bys and increase the number of non-revenue stand bys. The operational cost in the end will remain the same.

  • http://www.airlineticket.pk frequent flyer

    It looks like the merger is already causing some problems on flight reservations. I recently booked a flight online on continental from London to Seattle with 0 connection but after purchase, Iternery shows onepit stop in Chicago. Pretty frustrating. I hope there won’t be any more surprises.

  • Liz

    @Marc – Chances are good that neither company knows how they are going to combine frequent flyer programs yet. Delta and NW’s merger set the precendent that miles in both accounts will be combined once the merger is completed.

  • Randy Abrams

    United does not have good customer service. I fly 150k miles a year on a variety of airlines and United is the worst in the world when it comes to customer service. I was dissapointed when Continental joined Star Alliance as the Star Alliance is an agreement not to exceed low levels of customer service so as not to make any one member look to terribly bad. When Delta and Northwest merged, there was a noticeable increase in customer service. Northwest used to compete with United to be the worst, but couldn’t quite get as low as United. Time will tell if Continental raises United’s standards or lowers theirs.

  • noah

    I’d prefer to think that the deal WAS driven by financials. If the airlines are doing things like merging for non-economic reasons, the industry will be in even bigger trouble than it’s in now. Nobody wins when airlines go under.

  • Steve

    “My personal feelings about loyalty programs aside, there’s absolutely no evidence that merging Mileage Plus and OnePass will benefit anyone.”

    *quietly raises hand* I’m probably one of the few people who’s happy to see United and Continental merge. The reason? I’m an infrequent flier (3-4 trips a year for business, 1-2 trips a year for pleasure), and my employer doesn’t stick with one or two particular airlines; they book whatever is cheapest/most convenient. The United/Continental merger means one fewer carrier at our local airport and thus more consolidation of any miles I earn. (I was happy about the Delta/NW merger for the same reason). Now, my regular travel should always be enough to keep my miles active on United, Delta, and American; granted, I’ll probably be 110 by the time I’ve earned enough for a free flight, but hey, might as well earn them. :)

  • Mike P

    I am very disappointed with this merger. I have found United customer service to be lacking in every way, late flights, rude staff, you name it they do it poorly. On the other hand when US Air cancelled my flight last March due to bead weather in Charolette, and said they couldn’t get me on another flight for three days (my vacation would have been half over) I called up Continental and they had me on a flight that day to Houston to get me out of the way of the next storm on its way to hit Chicago. They couldn’t get me to my end-point in Belize because by the time we got to Houston all of the flights for the day had left already, BUT they put us up in a hotel for the night, provided us with dinner, breakfast the next morning, and lunch! They didn’t have to do it, they just did it. Customer service, plain and simple. I swore that I would fly Continental from then on out, regardless of price difference. I’m sick of the price wars, give me customer service back!

    Plus did you ever try and book an international flight with your air miles on United? It is next to impossible. Try it Contenential and you can get almost any where.

    Whose philosophy will win out, if its United’s, that doesn’t leave a single major international carrier left with any customer service. Anyone have a spare billion to start a nice international airline with customer service? I’m in!

  • Charles

    I’m not the biggest expert on this but I’m guessing that this merger doesn’t have a good chance of passing antitrust approval. United and Continental are members of two different airline alliances (Star Alliance and One World), and the DOJ antitrust division has pushed against proposed mergers of this nature before. Didn’t United try to merge with Delta a couple years ago only to have the DOJ antitrust division block it? Delta and Northwest may have merged, but they were in the same airline alliance anyway and their merger couldn’t possibly have as large an impact on fares.

  • http://www.docomomofl.org richard

    It looks ominous to me. An article the other day (in the NYT?) observed that CO’s CEO has been quietly reshaping the airline in the image of UAL. That is, no food, charging for bags, for exit-row seats. In my opinion, UAL has been the absolute worst carrier, while CO was more or less acceptable. The combined carrier looks like it will be a big, powerful, and horrible.

    I’m hoping SWA, Jet Blue, and other quality operations take advantage of this opportunity to build their operations and become more competitive in more markets — especially internationally.

    SWA had been talking about an alliance with Volaris in Mexico. It appears to have gone nowhere, unfortunately. CO has a lock on much of Mexico with its flights out of IAH. Code share flights to Mexico from a California gateway and a Texas gateway (and ABQ or FLL?) would make this traveler very happy.

  • Joel Wechsler

    @Adrian The problem with your atrgument is that there is absolutely no evidence that the United-Continental merger will result in a “more viable and healthy” industry. The history of airline mergers in fact seems to contradict this possibilty. Call me a cynic if you want, but my belief is that this merger was indeed driven by financials, primarily those of Glenn Tilton, who stands to benefit mightily from a change of control without even having to move to Houston.

  • Scott

    Wow….yes, the world is coming to an end people….but at least get your facts straight.

    @Charles: Wrong. UA and CO are both members of Star Alliance.

    @frequent flyer: How “frequent”? The merger is “already causing problems”? LOL! They just announced INTENT to merge a couple days ago. Until shareholders from both companies vote, and the government approves it, nothing can change!

  • http://www.freefrequentflyermiles.com/index.htm Gary Steiger

    United Airlines blocks Star Alliance tickets. Continental does not. United is the only Star Alliance airline that blocks Star Alliance tickets.

    Let’s hope Continental’s policy prevails.

  • Shari

    @ Zach – How is Chris really putting things out of perspective? I don’t see it at all.

    Personally, I don’t see anything good coming out of this merger. Continental was one of the last holdouts that actually had customer service, and even went as far as serving meals on non long-haul flights(!), something long gone from the general airline industry. United has been, in my experience, a so-so airline. This merger isn’t going to be beneficial to us fliers, it’s going to result in us having a large, so-so airline lacking the things that made one of the original companies good. Add to all of this even less competition, and there’s little good that’s going to come out of this.