Continental Airlines Inc. Chief Executive Officer Jeff Smisek defended a proposed merger with UAL Corp., testifying in federal court that combining the airlines will “increase our revenue and decrease our costs.”
Read the rest of the story from Bloomberg News.
House of Representatives Transportation Committee Chairman James Oberstar is on a tear. Last week the Department of Justice approved the merger of United and Continental airlines.
Air Transport World reports, “Oberstar said in a statement that DOJ “had little choice” but to approve the UA/CO combination owing to the “very narrow set of criteria” current US law allows it to use to make judgments on airline mergers. He said there is a “need to give broader authority over such mergers to the Department of Transportation, allowing DOT to consider such factors as the impact a merger will have on service to communities and customers, as well as the effect the merger could have on the industry as a whole.”
Read the rest here.
Last week the U.S. Justice Department gave its blessing for the merger of United and Continental airlines. This week mergers details are emerging. The Houston Chronicle reports the merger is expected to be a done deal October 1. But it will likely be May of next year before customers start to notice differences.
Read the rest of the story here.
10:20 am
Guy has thoughts and questions:
“With the United / Continental merger do you think we’ll now get air service to Newark? Also, What are your thoughts . . . I predict Cleveland will go the way of STL, PIT, CVG with Denver soon to follow. San Fran is a far superior western outpost for the now combined airline.”
Service to Newark? Not a chance. That’s because the merger won’t change a very basic fact: Springfield is a small air market in the center of the country.
From the airline perspective there isn’t enough demand in Springfield to justify service to any one NE city. So what do airlines do? They collect passengers from small markets, like Springfield, and fly them to large hub airports. At the hub, small market passengers are, in effect, collected and deposited on bigger airplanes and flown to NE destinations. Most travel to the NE, from Springfield, is done through the hub airports in Chicago, Memphis, Dallas, or Atlanta. This is called the “hub and spoke system.” Our airport is a spoke.
As for your thoughts about the combined airlines’ hubs…
Yes, Cleveland will see a reduction. But Denver? No way. That’s the sort of scenario that occurs only in the dreams of Frontier Airline executives…
Just over a month ago we were speculating about a possible merger of United and U.S. Airways. Those merger talks were going hot and heavy when the plug suddenly got yanked. The next think you know United is standing at the alter with Continental. Wow…it’s the sort of drama that goes on at high school proms!
So what does it mean for our airport? Before diving into that, keep in mind that this marriage must be approved by the federal government. Will a Democratic administration be as receptive to an airline merger as a Republican one (Republicans were in charge when Delta and Northwest merged a couple of years ago)?
Assuming the deal is blessed by the feds, let’s look at what the two airlines bring to the table. This discussion will mainly deal with just North American operations:
United:
Continental:
Check out the North American route maps: United and Continental.
The first thing to point out is that both airlines are members of the Star Alliance. So some Springfield customers are already taking Continental via code share with United.
As for hubs, it seems doubtful that there will be much change, except for Cleveland, which could be pared back.
The most obvious question concerning Springfield is whether the combined airline will start service between Springfield and Houston? That will depend on at least two things: 1) will the new airline’s analysis of Springfield traffic justify the service, and 2) will the new airline want to compete with American for Springfield customers that currently connect through Dallas on their way to smaller Texas cities? That’s an oversimplification, but it gives you an idea of the questions the airline will ask.
Bottom line? Barring a huge restructuring of the airline’s combined networks, we don’t see much change on the horizon.
Listen up you United and Continental frequent flyers…
Starting next year the airlines “will allow members of each carrier’s frequent flier program who have earned elite status to receive unlimited free upgrades on flights operated by both airlines when space is available.”
Last week United’s CEO was chattering about the possibility of a merger… This week it’s the president of Continental Airlines, Jeff Smisek. He’s chattering about the possibility of merging with United.
FYI…Last year United and Continental flirted with the idea of merging. Talks broke down when United’s poor financial status became clear.
Jim wants to know, “Is there a reason why Continental does not have service to SGF? It seems like a lot of people fly to Houston and NYC every day and they could probably make some money on those routes?”
I don’t know a specific reason, but there are always the general reasons: our airport doesn’t fit into the airline’s network; resources are needed somewhere else, etc.
