New United To Focus on Corporate Fliers

United and Continental Airlines claim that they will not be raising prices of cheap airplane tickets and cheap vacation packages for vacation fliers.  Instead they plan on making their $3 billion merger a success by attracting more corporate fliers.

According to the CEOs of both companies, they hope their merged airline will appeal to more business travelers willing to pay top dollar for last minute tickets.  They contend that by combining the two airlines networks of flights across the country and around the world that they will be able to increase corporate sales by as much as $900 million per year.

Industry experts agree that leisure fares probably will not change significantly because Continental and United routes overlap a great deal with low prices airlines such as JetBlue and Southwest.  They compete with discount airlines on 92 percent of the 50 largest routes that they fly.

Historically the leisure airline market is very competitive and thus the airlines find it difficult to increase prices.  Business travel is less price sensitive.  Businessmen feel compelled to make trips and typically pay more for their flights.

After the merger the new United will have 57 percent of its capacity devoted to domestic flights, with 20 percent across the Atlantic, 15 percent across the Pacific and 8 percent to Latin America.

United claims that it has no plans to eliminate service to any cities that have been serviced in the past by United and Continental.  It does acknowledge that it will reduce headquarter jobs in Houston and Chicago, but has provided no specifics. 

After this merger, there will be three large U.S. airlines flying major international routes:  American, Delta, and United, with US Airways a distant fourth.

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