Airline mergers could lead to fare “creep”

by Tom Johansmeyer on

The Southwest/AirTran merger isn’t expected to push fares much higher. The disappearance of seats that comes with airline consolidation would make you think that prices are about to rise, as the fundamental commodity of the airline industry becomes increasingly scarce. But, we’re not close to that point yet, notes USA Today:

“We’re not at the tipping point,” says George Hobica, founder of Airfarewatchdog.com. “I don’t think fares will be impacted much until we have three legacy carriers and one discount carrier remaining.”

The number of seats, however, is shrinking across the airline industry. Since September 2007, the number of domestic seats available has fallen 10 percent.

According to Hobica, look for fares to “creep upward,” but not at a rate that will horrify customers, a position supported by Frank Werner, associate professor of finance at Fordham University. He tells USA Today: “Generally, airline mergers remove competition from the skies, leading to higher prices. This will happen in markets where the combined Southwest/AirTran will not have a dominant market share.”

[photo by SkilliShots via Flickr]

New United Airlines livery still keeps a bit of Continental in the mix

by Scott Carmichael on

What you see here is the proposed final product of the United Airlines – Continental merger. As you can see, the new airline will fly with the United name, but keeps the globe logo from Continental.

I’m not sure what to make of it – but since these two airlines have been such important players in the aviation world, it’ll take a while to get used to the combination.

Over at Unitecontinentalmerger.com, you’ll find a lot of information about the merger, and how it’ll impact travelers.

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Are Australia and New Zealand merging?

by Jeremy Kressmann on

The countries of Australia and New Zealand have long enjoyed close relations. The two nations fought together during World War I and citizens can move freely between both countries for work. They’re close enough, in fact, that there’s been increasing talk by politicians of combining them together.

Is this some kind of crazy joke? According to a recent television poll by Television New Zealand, it’s not. 37% of New Zealanders thought the country “would be better off” merging with their nearby neighbor. Former New Zealand Prime Minister Don McKinnon has offered similar remarks, calling an Australia/New Zealand merger “inevitable” though it may be many years before it becomes reality. The reasons for the proposed union are largely economic, with some in New Zealand suggesting the country is falling behind Australia in key figures like per capita income and investment.

Despite the rumblings of merger, a large number of New Zealand’s citizens are profoundly against the measure. In a separate poll, 71% of New Zealand residents were opposed to the idea of New Zealand as an Australian state. Current New Zealand Prime Minister John Key has also indicated the proposed merger was “not going to happen.”

Considering the proud independent character of New Zealand’s citizens, the merger talk seems surprising. Here’s hoping New Zealand can put such talk behind them.

Next candidates for an airline merger – United Airlines and US Airways?

by Scott Carmichael on

In what can probably be described as “just a matter of time”, rumors are heating up about a possible United Airlines / US Airways merger.

The push for this kind of consolidation is being fueled by the last big airline merger – that of Delta Airlines and Northwest Airlines. Of course, anyone who has followed the aviation world will know that a United/US merger has been in the news before. The two tried to merge back in 2000, and again in 2008. At one point they had already put their signatures on the deal, but had to cancel the party when the government and unions voiced their opposition.

Despite the size of the two airlines, a combination would still only make them the second largest in the nation.

All these mergers mean fewer airlines (US Airways merged with America West several years ago), and a United/US merger may force Continental to go shopping for similar arrangement.

Of course, things are still in a very early stage, and have not moved beyond “speculation”. Time will tell whether three times really is a charm for these two airlines.

Hundreds of flights cancelled as Iberia workers go on strike

by Sean McLachlan on

Thousands of passengers were left stranded today as workers at Iberia Airlines walked off the job for the first day of a two-day strike.

Iberia was forced to cancel more than 400 of its 2,000 flights for this Monday and Tuesday as cabin crews protested the fact that they haven’t received a pay increase in four years. This is a tough situation for Spanish workers, who live in a country with one of Europe’s highest inflation rates, between 3.6 and 4 percent annually in the past few years. And that’s just the official rate. Living in Madrid I can say that here at least it seems to be much higher.

Spain’s national airline has been hit hard by the recession and this new blow will only worsen its situation. It couldn’t be helping Iberia’s chances of clinching a proposed merger with British Airways either.

Information on the affected flights is available here.