Continental/United Merger Update

Although many questions remain about post-merger Continental/United Airlines, one just got answered. As of September 30, next year (2011), you will no longer be able to dump AmEx Membership Rewards miles into your OnePass account with Continental. And AmEx Platinum and Centurion cards will no longer gain entry into Continental’s airport lounges. Although AmEx describes these changes as an inability to reach a new agreement, what it really means to me is that, in the upcoming merger, United’s Mileage Plus is likely to be the future model rather than OnePass. If you’re sitting on a pot of AmEx points, you have plenty of time to decide what to do. But if you’re either a big Continental or United user, move those points before the end of next September. This unique opportunity to trade AmEx points for United miles probably won’t return.

Despite the fact that the merger isn’t yet formalized, it’s a done deal. Stockholders have agreed. To assuage government regulators, the lines have already agreed to transfer what amounts to United’s old slots at Newark Airport over to Southwest. And to ward off any political pushback from Ohio, the pre-merger combine announced that, come what may, the unified line will retain its Cleveland hub for at least two years. {{{SmarterBuddy|align=left}}}Although the merger partners have been lavish with claims about “global reach,” most of the attention on the merger has been on financials and management structure. The merging lines have had little to say about details that matter most to customers:

• You can be sure that mileage balances and status levels in either Mileage Plus or OnePass will carry over to a merged program. In mergers among big airlines, combining frequent flyer programs is a sacred cow. You won’t see anything different here.
• But the merged lines will have to rationalize award earning and use details. For example, for travel within the 48 states, Continental offers a 20,000-mile award for short-haul travel and a stopover for an additional 10,000 miles; United doesn’t offer either. Given that the 20,000-mile award is a lousy deal, I suspect the merged line will adopt it; because the stopover adds little cost and burns up mileage, I suspect it, too, will survive. Otherwise, the two lines have already pretty much rationalized their award tables.

Three other important product questions, however, are still in doubt:

• Where will the inevitable cutbacks hit? As with most airline mergers, cost “savings” is part of the rationale, and that means flight and personnel cutbacks. Smaller communities now served by connections from separate Continental and United hubs may be cut back to just one.
• What will happen to Economy Plus? Continental did not copy United’s program allowing travelers to pay for semi-premium economy seats with extra legroom, which is apparently popular with a sizable minority of travelers. But the decision of whether to extend it to former Continent plans or abandon it fleet-wide rests with the bean counters, not the customers, and I have no idea how the numbers look. The one outcome I would not expect is retaining it in former United planes only.
• What will happen to international first class? United’s mainline intercontinental planes—747s, 767s, and 777s—all retain first class along with economy, semi-premium economy, and business class, while Continental’s two-class intercontinental service abandoned first class in favor of a beefed-up business class. Continental is in the process of upgrading its business class to flat-bed seats—an increasingly important competitive standard for business class—and that should be enough to satisfy most travelers. However, such major competitors Air France, British Airways, Qantas, and Singapore continue to offer an ultra-opulent first class, and the merged line’s management may conclude their line has to match.

For now, all you can do is sit on the sidelines and watch the show. The only decision you’ll have to make is whether to dump AmEx points into Continental—which you need to do before September 30, 2011.

Your Turn

Does the Continental/United merger affect your frequent flyer miles? What do you plan to do about it? Share your thoughts on the issue by submitting a comment below!