A group of 49 passengers is suing to block the merger between United and Continental, citing fears that the deal will result in an industry dominated by large monopolies and high fares for consumers. According to Ben Mutzabaugh at USA Today, the suit also “predicts that allowing the merger would pave the way for even more consolidation.”
Both airlines flatly deny that the merger will be bad for customers. United spokeswoman Megan McCarthy told Forbes the suit is “without merit,” and reiterated both airlines’ well-worn refrain, saying the deal “will benefit customers with the most comprehensive route network, connecting people across the world and the U.S., including 148 small communities.”
So does the suit have any merit? For consumers, the merger is a wash at best. Consumers already have access to far-reaching route networks through airline alliances currently in place; the merger provides no unique benefit there. Looking into the future is something of a fool’s errand—some people claim higher fares are the inevitable result of consolidation, others suggest the merger will open the door for low-cost carriers to expand and subsequently bring prices down.
The better question is whether or not the suit has a prayer of succeeding. The lawyer representing the 49 plaintiffs is the same lawyer who brought a similar suit against Delta during its merger with Northwest. That lawsuit, obviously, was not successful.
I’m not a lawyer, but my sense is this lawsuit won’t be successful either. First, it’s difficult to prove that the merger will have a significant negative impact on a majority of passengers. The effect will be varied, with some passengers getting squeezed while others barely notice a change. Much depends on passengers’ local markets, namely whether or not they’ll see a meaningful loss or routes and how much competition exists at their airport. Second, it’s up to the Department of Justice (DOJ) to decide on the implications of the merger in terms of monopolizing the industry. If the DOJ grants approval, it’s hard to see a class-action suit challenging the deal. That ruling shouldn’t be too far off in the future.
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