Monday, May 3, 2010

Introducing the World's Largest Airline:

United and Continental merged: what does this mean?
Our thoughts:

1. Higher Prices
2. Lower Customer service.

It is a fact - anytime you eliminate competition from the market - you'll end up with higher prices. At this point -US Airways will have no choice but to combine with American - this will leave the USA with 3 major network carriers...this is dangerous.
Sounds like the automobile industry. The "Big 3" American automobile companies got lazy, fat and guess what: Americans simply bought more imports and we know who now owns both GM and Chrysler (FYI: Obama)!

Well - foreign carriers cannot fly domestic USA route - so how is this going to happen?
Replace "Import Automobiles" with Low Cost Carriers.

Southwest and other Low Cost Carriers will flourish. Network carriers are designed for one purpose: To ferry customers to their international hubs and fly them across the world. LCC's focus on simple, highly trafficked point to point routes. If you live in a major city you are safe: prices to other major cities should stay cheap. If you live in Fargo and you need to fly to Louisville: this will get more expensive.

What does this mean for AFCNET?
We are optimistic. United is a big believer in specialty fares, nets and such. Continental is not. If the merge truly mean than United is the legacy, and Chicago remains its headquarters - its safe to say many of the pricing and revenue functions of the "New United" will remain with the old United formats. United does know how to run a profitable Pacific network, as well as a profitable joint venture on the Atlantic with its alliance partners. Continental was always the odd-man-out and therefore it did things its own way. It remains to be seen - but our belief is the Continental way of revenue and pricing will simply disappear under the new merger.

The new United Airlines International Network:
(very impressive indeed!)

No comments:

Post a Comment