Jag Venugopal's Blog

May 6, 2010

United-Continental Merger: Good for the public?

Filed under: Business — Jag @ 10:25 am

Professor Michael Roberto (I’ve had the pleasure of being an MBA student of his) blogs about the synergies mentioned in the United/Continental merger. He expresses skepticism about the revenue synergies that are claimed as a benefit of the merger. That set me thinking: Could one of the synergies on the revenue side be increased pricing power? Post-merger, there will be four large domestic airlines: Delta, United, American, and Southwest.

From a consumer’s standpoint, the cut-throat competition currently underway is a double edged-sword. While fares are dirt cheap, air travel now ranks right up there with a root canal in terms of perceived pain. If better pricing power were to allow predictable flights, absence of silly fees of all sorts (e.g. the semi-seriously mentioned restroom fee, carry-on fee, etc), and a modicum of customer service on the ground and in the air, that would be a good thing.

Think about it: Would you take a 10-20% increase in fares if you had fast check-in lines, predictable flight schedules, didn’t have to wait hours on the runway, a clean and spacious terminal waiting area, and (now I’m dreaming…) decent beverage and peanut service on board?


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