subject: Foreign, Low-Cost Threats Behind United Merger [print this page] Foreign, Low-Cost Threats Behind United Merger
Given that international competitors have emerged, and powerful new airlines continue to gain ground, only by merging Continental and United will the larger merged airline be able to competitive effectively, according to Continental's CEO. He argues that the combined airline will be more financially viable than either airline on its own.
The proposed merger, announced in May, will, if approved, create the world's largest airline when measured by revenue and traffic. Delta Air Lines currently holds the number one airline position.
In order for this proposed deal to be finalized it must gain approval by the antitrust officials at the Justice Department. If this happens, the three largest U.S. airlines will be United, Delta and American. Together they would control 35 percent of the market, with United managing almost half of that. Antitrust officials have the responsibility to protect the American traveling public, as all costs. It is unclear what position they will take in this challenge.
Some senators have come out against United's proposed merger, claiming that it will hurt consumers and negatively impact competition, driving airline ticket prices up. Although Congress does not have the ability to forbid the merger, it has influenced regulators and public opinion in the past. It seems like senators are involving their positions on subjects that are out of their resposnibility.
United's CEO asserts that if United and Continental are merged, the new company will be better prepared for whatever the next shock, that is sure to come, that will rock the airline industry.
