Luxury site Virtuoso weighs in on world’s largest airline merger
Virtuoso, the luxury travel network that produces more than $5.1 billion in travel sales, posted some “pros and cons” of the $3 billion United-Continental merger. They were:
Pros
• Loyal customers of both airlines will now have more options where they can exercise their status. Plus, the increase in routes should allow them to accrue miles faster.
• Continental’s hub cities are Houston, NY/Newark and Cleveland, while United’s hubs are Washington DC (Dulles), Chicago, Denver and San Francisco. Customers will now have a larger selection of originating flights.
• Both airlines are members of the Star Alliance, the largest worldwide network of airlines, which should make for a smoother transition during the merger.
Cons:
• There is a high probability that these airlines will combine routes and reduce the overall number of flights, thereby diminishing the available capacity.
• A merger is almost certain to drive up fares, especially on the US domestic routes.
• The two remaining major US carriers (American Airlines and US Airways) left in the game will need to forge their own mergers or alliances to remain competitive. Airlines now make their money on long-haul international flights, so you’ll see stronger alliances with global partners and even relationships with Low Cost Carriers (LCC), like the proposed alliance between American and JetBlue.
• Low Cost Carriers like Southwest and JetBlue will moderate the domestic fares on routes where they compete with the majors. However, the mega-merged airlines will be less vulnerable to the low cost carriers’ pricing due to their new size and scope of business.
“After Delta’s merge with Northwest Airlines, it was inevitable that other airlines would need to merge to compete against the strengths and synergies of the ‘new’ Delta,” said Jim Osborne, Vice President of Air, Space & Specialty Products for luxury travel network, Virtuoso. He added:
“United and Continental complement each other with similar strengths in Asia, Europe, and the South Pacific, and the addition of more hub cities makes them even more competitive in these markets.”
By David Wilkening
David
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