United Airlines, or Why Mergers Suck
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- 3 min
Tim Wu, the Columbia law professor, candidate for Lieutenant Governor of New York, and celebrity advocate for Net Neutrality, is leaving United Airlines and will presumably never fly them again! Like so many loyal customers, he blames the merger between Continental and United as the primary reason:
The United merger is a grand example of a consumer sinkhole—a merger that proves to be not just a onetime event but an ongoing disaster for consumers (and shareholders) who suffer for years after.
For the most part, I agree!
The merger has made it a lot more expensive to fly in an cramped aluminum tube. It is the biggest reason why I haven’t travelled much this year. And because there’s no chance I will ever get an upgrade, I would be getting a worse product than in the past. In short, passengers like me are getting less for more. That’s exactly why mergers suck, and why you should be on the defensive when a company you like to patronize merges with another. It’s good only for the top executives and the financiers who arrange the unholy union.
The mergers in the airline industry, whereby we now have only three network carriers, has diminished competition. When one company raises prices or reduces the quality of service, another company can follow suit because consumers have no viable alternative. Since Delta merged with Northwest Airlines in 2009, it has implemented all kinds of draconian requirements for attaining elite status, implementing a spending requirement in addition to flying a requisite number of butt-in-seat miles or segments, and tying Delta miles to dollars spent on travel rather than the more logical way of earning miles based on distance travelled. United has followed suit with each of these policies and, earlier this week, even raised the amount of money required for attaining each level of elite status.
But what annoys me the most, and where I disagree with Wu, is that a merger can in fact yield a better experience for a consumer. It might be a case of the grass seeming greener, but from a distance, combining Delta and Northwest has apparently yielded a better product even as it draws the ire of the bean counters. There’s WiFi on almost every flight, and because there’s a first class cabin on just about every plane it flies, you have a better chance at an upgrade.
I have a close family member who works for United, and I worry about the future of the airline in the prolonged wake of this merger. I also miss sitting in Row 9 on flights between JFK and LAX, and I hate schlepping from New Jersey when arrive on a flight to “New York.”