While United Airlines has languished near the bottom of many quality and popularity rankings, Continental’s image has stayed sky-high. And now that the two are merging, will the new United benefit from Continental’s popularity — or will the new airline be derided as nothing more than the old United with a new set of paint? Industry-watchers questioned by Ad Age aren’t very bullish: “Fares will be higher, and service will be reduced,” warns Chris Elliott of elliott.org.
Ad Age posits that “Continental has the distinction of being one of the only U.S.-based legacy carriers with any significant amount of consumer goodwill in its back pocket, say industry analysts. Its customer service and frequent flyer programs are highly regarded throughout the industry.” However, that goodwill can only go so far.
Robert Herbst, an airline analyst and founder of airlinefinancials.com, said Continental’s big challenge will be transferring its image on to United’s passengers and employees, who he said have been unhappy for years. “United has done a lot to ruin their image from what it was 10 to 12 years ago,” Mr. Herbst said. “It was a strong carrier in the U.S. but has become one of the weakest.”
“I want to see the inside of your new planes and the comfortable new seats in economy class,” Mr. Elliott said. But there’s reason to be skeptical. [CEO Jeff] Smisek has, since taking the reins at Continental, imposed exit-row charges and eliminated free food on domestic flights. And, points out Mr. Herbst of Airlinefinancials.com, most consumers do still shop based on price.
Mr. Elliot personally doesn’t believe the deal offers any real benefit to the consumer. “Fares will be higher, and service will be reduced,” he said. “They will have more fortress hubs becoming a de facto oligopoly, allowing them to set their own prices. We become captives of the airline, and that’s how they make money.” And so far United hasn’t done anything to convince people that the combination is good for them.
One upside for consumers who have no interest in United: If the merged airline loses slots in some airports, it could allow “low-cost carriers the chance for new routes to airports they weren’t flying to previously,” according to Charlie Leocha, president of the consumer-travel alliance.
Will United Deal Cost Consumers? [Advertising Age]