Airlines Make Final Approach to Monopoly of the Skies

http://www.inthesetimes.com/working/entry/5930/airlines_make_final_approach_to_monopoly_of_the_skies/

Friday April 30 4:00 pm



A United Airlines plane parks in Washington, D.C. on April 8. United is expected to soon announce plans to merge with Continental. (Photo by Chip Somodevilla/Getty Images)

Expected United-Continental merger would create world's largest airline


By Carl Finamore

The Wall Street Journal reported on Thursday that United Airlines (UAL) is very likely to soon announce their merger with Continental Airlines, making it the world's largest airline by number of passengers carried. UAL is the nation's third-largest airline while Continental is number four. If actually successful, the single carrier will reportedly keep the Chicago-based United brand name.

This comes partially in competitive reaction to Delta swallowing up Northwest Airlines in 2008, itself becoming, briefly, the world's number-one carrier in both market value and passengers. All this jockeying is not new.

When Congress deregulated airlines in 1978, the central premise was to expand competition, to offer consumers more choices and to lower prices. On all accounts, these have been exposed as complete myths and distortions. Today, thirty years after the deregulation of airlines, there is a virtual monopoly in the skies and steadily increasing fares.

The major airlines view mergers, according to a dispassionate January 10, 2008 Reuters dispatch on the eve of the then-impending Delta and Northwest merger, "as a way to stabilize the industry by allowing carriers to cut costs, reduce capacity, and raise fares." Nothing has changed. (Recently, Southwest tried to purchase Frontier before Republic ultimately took it over. United was actually courting US Airways several weeks ago even as its talks got started with Continental.)

There are now only five major US carriers on the world scene with many savvy analysts predicting only three surviving along with a scattering of several domestic low-cost carriers like Southwest. It is much the same internationally.

Whereas there were 50-plus international carriers that competed across the Atlantic in 1980, today there are three non-US carriers expected to be sole survivors on the world scale if the dominant tendency to consolidate holds.

FULL story at link.