Continental and United, a match made in heaven?
Posted on May 19, 2010 12:00 am by
It was hardly a surprise when Glen Tilton and Jeff Smisek announced that the two airlines were engaged to be wed; to become one; to live United. A variety of industry conditions have made this marriage (or other pairings) fairly easy to predict. For one, major airlines CEOs like Glen Tilton and Doug Parker have been espousing the virtues of consolidation since 2001. In the global airline market, their thinking is "bigger is better."
For those of us who remember the good old day when being the largest U.S. carrier was all the rage, the new global marketplace is a shocker but it is also a reality, and critical mass does count. Escalating fuel costs also play into the merger/marriage mania. Fuel is such an "X" factor in the airline industry. Speculation and other external threats to oil production and refinement wreak havoc on airline profits or as is more often the case losses. Add in over capacity on domestic routes and brutal fare wars, and you can easily see that it may just seem nicer to wake up with a partner every morning.
So, even though this couple broke up in 2008 after a lengthy courtship, it's easy to see why they started dating again and then quickly became engaged. Of course, there was another woman lurking, not ugly at all, just waiting for her chance to "get a bite to eat" with Glen Tilton and United Airlines. Well, that just sealed the deal for Smisek and team.
There are still significant hurdles for the airlines to overcome- namely the Department of Justice and then linking their labor unions (will the children get along? Will they accept their new stepparents as their own?).
And in this part of the country, the newly engaged are making business and civic leaders in Cleveland extremely nervous about their future in the unified network. CLE is after all the smallest of all the hubs in the combined system. Small doesn't mean insignificant though. With 70% O/D traffic generated by the local market, it is quite a plum that some airline will want to snatch up. It also could help smooth out crazy operations at Chicago O'Hare and Newark, two of the most congested airports in the U.S.
So, what does all this mean for CAK? At this point, it is business as usual. We are laser focused on what we do best- offering customers a relaxing experience and air fares they can afford. No matter what happens with this marriage or other market shifts, our commitment will not wane. When you operate in a dynamic marketplace, like the airline industry, it is vital to remain focused on the fundamentals. So what to expect from CAK in the future? Expect more of the same.