United/Continental fares "likely to rise"

The merger between United and Continental airlines on May 3 could result in higher fares, an industry commentator has warned.

George Hobica, the founder of air fare comparison site Airfarewatchdog.com, said on his blog that "At least in the short term, fares are likely to rise, especially on routes with less competition and the 13 routes flown nonstop between the two airlines' hubs."

The merger has created a total of ten hubs for the firm, but Hobica cites routes such as Newark to Los Angeles, Cleveland to Chicago, Denver to Newark and Houston to Denver as key routes that could see increases.

"A rising tide of mergers tends to lift all airlines, so even other airlines such as American and US Airways, which haven't decided to merge with other carriers, will be able to raise fares as well," he continues.

"However, it's highly likely that low fare airlines such as Airtran, JetBlue, Virgin America, Southwest, and Allegiant will see opportunity in these increased fares, and expand service on routes where fares have increased."

Hobica also believes that the merger could see an increase in fees for Continental, which currently has fewer "ancillary fees" than United.

On its merger website, the airline claims that it will have competitive fares, saying "Airlines are under strong competitive pressure to keep fares low and we expect that pressure to continue."

The merger between two of the United States' largest airlines creates the world's largest carrier by the number of passenger-miles flown. The combined group will be named United Airlines, but planes will carry Continental's livery, logos and colors. It will, according to United, be the most modern and fuel efficient fleet of the major US carriers.

Routes, however, are unlikely to change, with the airline saying that it "will continue to maintain service at all communities currently served by either airline, including more than 140 small metropolitan areas and communities."

Frequent-flier members could stand to benefit from the deal, however. For elite customers, perks such as upgrades, priority check-in, pre-boarding and baggage benefits are set to be rolled out across both airlines.

http://www.airfarewatchdog.com
http://www.unitedcontinentalmerger.com