It has been a couple years now that Continental and United Airlines have been dancing around a potential merger. For the past couple weeks the conversations have been pretty much just about the minor details, with the transaction all but assured. And now pretty much everyone is citing “sources close to the transaction” who suggest that the deal is done. The merger will be announced on Monday as official and, with that, Continental Airlines will begin the final steps of its existence.
So what? Well, there are a couple things worth discussing with the merger.
Like any merger of reasonably like-sized partners there are issues of branding, corporate culture and workforces. This is going to be the hardest part for the new company to manage. The brand is going to be United still. Probably a smart move given the global recognition that it holds, even if much of that recognition is of who not to fly. Having a name out there and addressing the quality issue is generally easier than introducing a new name. Sure, there are plenty of folks who say they’ll never fly on brand XX but, well, that sort of attitude is delusionary for the most part. When they are the best price and best route offered, folks simply aren’t willing to avoid the product.
The people side is going to be harder. As of yet I have not heard or read anything about integration of seniority lists for pilots or flight attendants. US Airways and AmericaWest got caught in that mess with their merger and they still haven’t solved the problem. Delta and Northwest Airlines, on the other hand, had the seniority thing figured out before they made the announcement. It significantly sped up the integration process, the basis on which most of the projected cost savings comes from. How will that be addressed? Hopefully someone is smart enough to ask that at the pres conference on Monday.
Still on the people front, there is a personal element to the situation, too. I’ve met scores of Continental and United employees over the years as they are probably the two carriers I’ve put the most miles on lately. And a lot of those folks are going to be losing their jobs in the coming months. It is going to suck. I’m very much not looking forward to that at all. Hopefully the friends I’ve made make it through unscathed.
From an operations and frequent flyer perspective there are plenty of concerns to be had. The two carriers have very little overlap in their route structures. So as they stop competing with each other we can expect to see fares rise in a number of places. Probably bad for the consumer but there is also something to be said for earning points in a program that won’t be going out of business tomorrow. At least in theory. Continental is known for having much tighter controls on routing options, particularly on their most discounted fares. United is know for quite the opposite, permitting crazy routings just for fun. I expect that the Continental mentality will prevail on this front, helping to bring down costs a bit and to better streamline the operations overall.
But the United MileagePlus program is almost certainly the loyalty program that will survive the merger. The good news is that the programs were well on their way to operating under very similar rules anyways thanks to the previously announced partnerships. Upgrades were going to be pretty much the same for elite passengers from both programs, for example. Each side had things they did better than the other and those that they did worse. Unfortunately for the frequent flyer community it is likely that the quirks that favored the customer will disappear as the programs merge, just like they did with the SkyMiles program. Hopefully the new MileagePlus doesn’t go that far, but only time will tell.
Most of all, I am rather glad that I don’t really have a huge bank of miles that are about to change dramatically in value. Yes, I have some loyalty, but not so much that I cannot shift it if the new carrier and programs are not customer-friendly. The airlines have been very good about getting folks hooked on the points game to the extent that rational thought disappears. But they are companies, not people. The relationships are keyed on them making profits from their customers. Or, as one friend recently put it, loving a brand or a company is like loving a brick. The brick does not love you back.
Mergers like this are a great reminder to reset, so to speak, and to evaluate that loyalty.
I know I will be.
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