By now most of you have heard about the proposed merger between United Airlines and Continental Airlines, which if it happens will make the new carrier the largest airline in the world. So the mergers never stop it seems. Big companies become huge companies and huge companies become mega-companies.
Anybody know what ever happened to TWA airlines?
Anyway, with all of the talk surrounding the failures of big financial companies and companies that were deemed to big to be allowed to fail why isn't anyone talking about the merger between United and Continental creating a too big to fail company?
Both airlines have lost billions of dollars in the last several years. So why is it a given that this merger will be successful? And if it isn't then what? How many jobs are at stake here? A hundred thousand or more maybe.
Also what about the decreasing competition among U.S. airlines. In the last few years we've seen Delta merge with Northwest airlines to create what is now the largest airline in the world. And if the merger between United and Continental happens look to American Airlines and US Air to merge. We'd have three mega carriers carrying most of this country's and the worlds airline passengers.
Wouldn't all three be too big to fail?
One more thing. If we only have three mega carriers in the U.S and three or four discount airlines like Air Tran and Southwest, what will happen to ticket prices? Sure ticket prices at well served cities like New York and L.A. will be competitive. But what happens in smaller cities? We all know what will happen. Prices will go up and frequency of service will go down.
Hopefully our government will step in to stop this merger. We don't need any more mega companies in this country. We need real competition to spark better service and lower prices. Let what happened on Wall Street be a warning across all industries that too big to fail is not good for anyone.
Anybody want to wager that within 10 years there will only be two giant airlines in the U.S.? That's two if we're lucky.
6 comments:
Yep. If he trend continues there will be only two giant airlines in the next decade - and they probably will end up merging if the US economy has digressed even further.
Big companies become huge companies and huge companies become mega-companies. ...and the government eventually bails them out when, as you stated, it should have prevented such a merger in the first place.
@Don
The problem is these companies have millions to spend on lobbying congress so they usually get their way.
Agreed. I forgot about the third major political party - Democrats, Republicans and Lobbyist.
@Don
Ha! You're right. Lobbyist are a third party and probably have more clout than the other two.
One day there will be two banks so I guess this is par for the course.
@CO
I fear you may be right. If Wells Fargo and Bank of America merge I'm moving to Canada!
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