DieselDragRacer
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- Joined
- Apr 30, 2006
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WTF, O?
A group of 49 passengers is suing United and Continental in an effort to halt the airlines' planned merger. Bloomberg News writes the group "claims the companies' proposed merger would create a monopoly, increasing fares and costing jobs. The complaint was filed [Tuesday] in federal court in San Francisco by Joseph Alioto, a lawyer who said he's representing U.S. consumers and small businesses."
"It's going to turn into a monopoly," Alioto is quoted as saying by the Houston Chronicle. As for the plaintiffs, Alioto tells the Las Vegas Sun "these are small-business people. Travel is an important part of their business."
But the suit doesn't simply contend that the United-Continental merger would result in less competition and higher fares; It also predicts that allowing the merger would pave the way for even more consolidation.
The Sun quotes the suit as saying: "Both of the CEOs of American and US Airways have already indicated publicly of their approval of the elimination of capacity and of their desire to further concentrate the industry and eliminate even more capacity, with the obvious result of higher fares."
In making his case for the suit, Alioto -- who failed in a similar suit against Delta and Northwest in 2008 -- went so far as to call the proposed United-Continental merger "an unmasked effort to steal from the people," according to KGO-TV of San Francisco.
Not everyone agrees with Alioto and the lawsuit's contention, however.
While some experts and politicians have raised similar concerns about reduced competition and higher fares, others argue any overzealous cuts by a merged carrier would almost certainly be countered by new service from low-cost rivals. That, the counterargument goes, would hold average fares steady -- or possibly even drop them below current levels.
And -- from the business side -- some industry observers say that consolidation simply must happen if the U.S. airline industry is to have any hope of returning to stable financial ground.
"The network carrier model (hub-and-spoke) of the 1980s and 1990s does not work in today's environment," William Swelbar, research engineer at MIT's International Center for Air Transportation and author of the aviation-related Swelblog.com, is quoted as saying by the Sun.
"Consolidation is a logical step to position airlines in a highly fragmented domestic and global industry to better weather the financial challenges that have caused years of economic pain for many stakeholders and a rising tide of red ink," he adds, according to the Sun.
RELATED: Text of Swelbar's testimony to the House Judiciary Committee
As for Untied and Continental, representatives of both carriers dismissed the suit.
"We believe this suit has no merit, and we will vigorously defend what we strongly believe to be a transaction that is in the best interests of Continental, its shareholders and the flying public," Continental spokeswoman Julie King tells the Chronicle.
http://travel.usatoday.com/flights/...ue-to-block-united-continental-merger/98430/1
A group of 49 passengers is suing United and Continental in an effort to halt the airlines' planned merger. Bloomberg News writes the group "claims the companies' proposed merger would create a monopoly, increasing fares and costing jobs. The complaint was filed [Tuesday] in federal court in San Francisco by Joseph Alioto, a lawyer who said he's representing U.S. consumers and small businesses."
"It's going to turn into a monopoly," Alioto is quoted as saying by the Houston Chronicle. As for the plaintiffs, Alioto tells the Las Vegas Sun "these are small-business people. Travel is an important part of their business."
But the suit doesn't simply contend that the United-Continental merger would result in less competition and higher fares; It also predicts that allowing the merger would pave the way for even more consolidation.
The Sun quotes the suit as saying: "Both of the CEOs of American and US Airways have already indicated publicly of their approval of the elimination of capacity and of their desire to further concentrate the industry and eliminate even more capacity, with the obvious result of higher fares."
In making his case for the suit, Alioto -- who failed in a similar suit against Delta and Northwest in 2008 -- went so far as to call the proposed United-Continental merger "an unmasked effort to steal from the people," according to KGO-TV of San Francisco.
Not everyone agrees with Alioto and the lawsuit's contention, however.
While some experts and politicians have raised similar concerns about reduced competition and higher fares, others argue any overzealous cuts by a merged carrier would almost certainly be countered by new service from low-cost rivals. That, the counterargument goes, would hold average fares steady -- or possibly even drop them below current levels.
And -- from the business side -- some industry observers say that consolidation simply must happen if the U.S. airline industry is to have any hope of returning to stable financial ground.
"The network carrier model (hub-and-spoke) of the 1980s and 1990s does not work in today's environment," William Swelbar, research engineer at MIT's International Center for Air Transportation and author of the aviation-related Swelblog.com, is quoted as saying by the Sun.
"Consolidation is a logical step to position airlines in a highly fragmented domestic and global industry to better weather the financial challenges that have caused years of economic pain for many stakeholders and a rising tide of red ink," he adds, according to the Sun.
RELATED: Text of Swelbar's testimony to the House Judiciary Committee
As for Untied and Continental, representatives of both carriers dismissed the suit.
"We believe this suit has no merit, and we will vigorously defend what we strongly believe to be a transaction that is in the best interests of Continental, its shareholders and the flying public," Continental spokeswoman Julie King tells the Chronicle.
http://travel.usatoday.com/flights/...ue-to-block-united-continental-merger/98430/1
