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If United and Continental Airlines are to continue to offer cheap airplane tickets and cheap vacation packages and become profitable in competing with foreign and low-cost airlines, they will need to combine their resources. At least this is what United and Continental executives were saying on Wednesday during the second day of hearings in front of the House Representatives Transportation and Judiciary committee in hopes of gaining support for this 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. 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. 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. www.cheapfares.com
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