United Airlines
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United Airlines
Continental and United airlines merger
Everyone heard the news. United airlines merging with Continental airlines to form the largest airline in the world. The number 3 airline merging with number 5 airline would thus form the biggest number one airline.
This airline would cover 307 destinations and 59 countries would thus be accessible under single company. But is this merger good for anyone?
Let's start for managers of those airlines. Merger is great news for them as they get to cash in on their stocks. Is it good for investment bankers who backed the deal? Probably yes as once the economy turns around they will be looking at high return on their investment.
But what about the end consumers? Looking at history, every airline executive will admit that in order for them to survive they literally have to shrink the airlines and thay do that all over.
In the last year and a half USA airlines have parked more than a thousand of jets in the deserts of New Mexico, Arizona and California. That's roughly the equivalent of taking one major USA airline completely out of business. This means that there will be 23% fewer seats available. When you look into laws of supply and demand this means that no matter happens with fuel prices the air fares are bound to go up.
If you live in a small community and find yourself dependent on air service this inevitably means less flights than before.
Bottom line is: Only few years ago, USA had 8 major airlines and now the number shrank to 4. And less competition almost always ends up in higher prices.
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United Airlines Boeing 747-400 Heavy Takeoff At Chicago O'hare with ATC