Monday, May 17, 2010

Higher ticket taxes? Oh, please.

There's been a lot of speculation regarding higher ticket prices as a result of industry consolidation, particularly given the recent announcement of a merger deal between United and Continental.

Now, we learn that a bill recently passed by the U.S. House of Representatives would raise the taxes on domestic airline tickets.

Airlines are apparently fighting the measure, "warning the increase would impede industry growth and raise consumer prices."

But it seems like a whole lot of angst over nothing. For all of the fuss, the proposed tax increase would raise the "Passenger Facility Charge" from $4.50 to an astonishingly underwhelming $7.00.

That additional $2.50 would raise nearly three billion dollars that would go towards terminal and runway improvements.

And aren't terminal and runway improvements worth it?

I mean, seriously: are you going to put off your purchase of a $400 airline ticket because you're being asked to pay $2.50 in extra taxes? Would you even notice?

I doubt it.

And for an airline industry that gleefully imposed checked-bag fees that can add up to $60 to a flight for the privilege of checking two bags -- and that has in at least one case added a fee nearly ten times' the proposed tax for the "privilege" of a carry-on bag -- to talk about how this affects passengers is simply ridiculous.

Airports, runways, and air traffic infrastructure all cost money. $2.50 is a small price to pay.

Monday, May 3, 2010

The New United

It's official: Continental and United have agreed to a merger.

The new airline will retain the name United as well as that company's headquarters in Chicago, and will use the Continental logo and color scheme. Jeff Smisek, CEO of Houston-based Continental, will be the CEO of the merged airline, which will leapfrog over Delta to become the world's largest. Current United CEO Glenn Tilton will take on the Chairman role for two years before passing that to Smisek.

Announced this morning, the move was anticipated ever since news about a month ago that UAL was in merger talks with U.S. Airways. (For the reasons that I mentioned at the time, many suspected that the real goal was to prod Continental along.)

The deal is subject to the usual hurdles of antitrust investigation and union agreement, but there's little overlap between the UAL and CAL route maps, and many United employees view Continental as the ideal of what an airline should be. Given that Smisek will be taking the reins of the new company, my guess is that their support will come easily.

For Continental frequent flyers like me, one almost-guaranteed downside is the probability of higher elite-status requirements. United uses a 30-60-100K tier system; Continental has a 25-50-75K system. Does anyone think doubling the pool of potential elite members will result in using the lower standard?

But this is good news for a lot of reasons, and I'm all in favor of it. These have for some time been my two favorite international-scope airlines. Together, under the right leadership, I see the potential for them to revitalize the service element of air travel.