There’s a new New Yorker article that’s getting lots of play, “Why I Left United Airlines”
Most of the complaints in the piece are complaints about the airline industry generally which are then used as a general indictment of mergers.
And while I think that mergers generally fail to deliver on their promises to shareholders or customers, I’m not sure that United-Continental alone proves that and throwing in mergers in other industries anecdotally in a short piece serves to make the case either.
For the most part, how you feel about the article will track your general mood affiliation with United and with airlines writ large.
Nonetheless, this is a claim that I do believe:
The United merger is a grand example of a consumer sinkhole—a merger that proves to be not just a onetime event but an ongoing disaster for consumers (and shareholders) who suffer for years after. I wasn’t the only one who noticed the airline’s descent. Since 2011, United has piled up a mountain of consumer complaints (according to one report, only Spirit has more per passenger) and has repeatedly tallied some of the worst quality rankings in the nation, trailing even discount airlines like Frontier and AirTran.
Is there anyone who still flies United that do anything other than roll their eyes at this?
I believe that both United and Continental are worse airline operations, and less enjoyable to fly than they were before the two carriers were integrated.
What I don’t know is the counterfactual, what either one would be like today if the merger hadn’t proceeded. I’d guess that United might have merged with US Airways. United’s Glenn Tilton was finally open to leaving, the stumbling block in past merger discussions with US Airways was that Doug Parker wasn’t going to get to run the combined entity. I’m not sure that would have been better for United.. although it’s an interesting thought experiment because it’s hard to imagine American and Continental as merger partners.
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The simple answer is 99% of the time, removed competition will lower service quality for customers. It happens in most all businesses. Its only it the ‘wild west’ industries, those that have 100s of companies all vying for what is usually a new prize where consolidation ends up being GOOD for the customer. I don’t think many people think DL/NW was any good for customers, nor were most all of the previous airline mergers as well. We are also dealing with an industry that is making inventory scarce intentionally. When someone wants to come into the market and INCREASE inventory, they make it VERY hard to do so (see Virgin America, Jetblue, etc). Its rather unfortunate that we, as Americans, have let it get this bad.
I’m at 258k PQM on UA for 2014, and I’ve found the product to be consistent, and the service good enough. There are a few too many equipment delays, and the hard product isn’t very good. But for the most part, UA gets me where I want to go throughout the world, direct, and with minimal hassle.
I completely agree with Joelfreak.
The New Yorker article went on to draw a valid comparison between the airline consolidation and the possible Time Warner-Comcast merger, drawing the larger point about a field limited to a few big players resulting in higher prices and poorer service. In fact, we already see that internet speeds are slower and internet access prices higher in the United States than many other countries due to the lack of competition already pervading that field.
Gary, you repeatedly post about the decline in United’s and Delta’s programs and services, but seem to miss the larger point about the lack of competition stifling service and raising prices. How about starting to push for opening up our airline market to domestic competition from big foreign carriers? It’s only when the Japanese auto makers started to make big inroads that our “Big Three” domestic manufacturers started to improve. While in the short run there is no way the US Government will allow foreign carriers to open up domestic operations, I fear that this free market approach is the only way we’ll get out of the downward spiral in the quality of our airline industry’s Big Three.
I’ll only add a comment concerning quality: Late last month I flew United 1st class from Newark to Geneva. The lie-flat seat was quite comfortable, but the service quality was at astonishing low level. Casually indifferent flight attendants, uninteresting food, and non-premium drinks (e.g., White Horse as the sole Scotch — not to knock it, but it is simply one of the cheapest blends on the market). It got me to where I was going, but it made “United First Class” into an oxymoron. The old Continental Business Class was much better.
@Steve “How about starting to push for opening up our airline market to domestic competition from big foreign carriers?”
I have written on this, and I think it would be a good idea, but my bet is that it wouldn’t mean great service, Singapore Airlines flying Chicago – Los Angeles… it would mean RyanAir and EasyJet.
I’m pretty sure United-Continental is better than United-USAirways would have been. I would immediately leave any airline that merges with US Air, I have never had a good experience flying them. The service on United has been ok and they are the only US carrier that for a while now has had lie-flat seats on every intercontinental flight. Within the next few years, their “globalfirst class” will be removed and it’ll have be a ‘businessfirst’ product. Right now those old first class seats are there mainly for people to upgrade from business class. Many complaints (and delays etc) have to do with the old continental fleet, which have so many tiny regional jets. Once all of these terrible Embraer 145 get replaced with Embraer 175 planes, things will be better. I like the UA website, which used to be the CO site (certainly better than AA or DL websites, and better than the old UA website). It’s simple and functional and one of the few sites that still allow you to use the back button.
Generally speaking companies merge out of weakness. I think this has certainly been the case with the legacy airlines. They act more like government agencies than public companies. It’s time that the government really stops airline regulation. Let in foreign competition.
Everyone can whine about how bad our major US airlines are, but the fact is that airfares are ridiculously low compared to historical values, more routes are available for consumers, and most Americans want what is cheapest and not what is best. Americans vote with their cash, and Americans spend on what is cheapest. US carriers have merged, which certainly has decreased competition…but which also has increased the profitability for the US carriers for the first time in eons. Having profitable airlines is a plus for us and our economy, whether people want to admit that or not. It may not be best for point whores who want to travel for free, but that isn’t at all relevant for the purposes of our country’s economy. If people didn’t want these mergers, then they should not have voted for the GOP which is in bed with the airlines and thereby appointed people who want mergers and bigger corporate profits over the Democrats who support more competition.
United does not care folks, they know they have a large corporate accounts and leisure travelers will still fly them. The evidence is right in front of you, so it doesn’t take a blogger or people on FT to point out how horrible UA is. My husband and I went to Europe for 2 weeks, flew ORD-FRA in GF on UA, on the last 747 flights to FRA, the hard product is great, but the soft product was underwhelming at best. UA knows this and hasn’t and wont upgrade it. Flew back on a US A332 and thought the soft product was better then on UA, and this was a J product.
I don’t think for a moment that the article is actually about airlines. It’s simply used as a vehicle to attack cable companies and a proposed merger. The author has a long history of anti-corporate and anti-business pro regulation advocacy, particularly when it comes to telecom and cable companies.
@Rick C .. you would be correct.
I just flew United back from LHR yesterday. The United Club in T2 is the nicest non-first/business club I’ve ever been in. The food selection is enormous and the quality good. The flight was also excellent, with an individual video selection that rivals Singapore and Qatar. At this point my opinion of United has risen considerably.
@ Bill: what GOP approved an airline merger? It’s The Emperor’s executive branch agencies who approved all of them!
I personally believe that Delta’s operation is actually much better since the merger. Some of the best on-time performance, more routes, new Business Elite product, Economy Comfort, Wi-Fi, etc. The only thing that hasn’t improved is it’s SkyMiles program (which is huge).
American vote with their wallets and they like poor service and low cost.
No airline that gives quality service has lasted
AA lasted the most (if you can call it good when others were abysmal) and the investors in it paid the ultimate price.
The unions did OK. The flyers still have an airline
What happened to the poor guy who bought AA in 2000 and stuck with it loyally (long term investor) – screwed completely
At least now you can make money on it, one hopes for the next 5 years
As a flyer, I still use UA and the website is better for awards; the Premier desk still helps me for upgrades and I can fly any airline almost with the partners.
US is great for an elite and AA may be for a year or two until they also go to EQDs and thinning the herd.
DL has left DCA and so I do not care how bad it is to use skymiles
AS is nowhere near WAS
So it is COdbaUA and USdbaAA for me and I can survive in the WAS area
I knew we’d get a conspiracy theory at some point
Yeah, it’s Bush’s fault…
United was awful long before the merger. On my one International round trip with them back in 2005, I had several bad customer service incidents with United which only got worse based on the way they handled it. It was obvious United had an awful customer service culture all around and still do, based on what I read in the press and from what other passengers have told me. After that one round trip flight and how they handled problems afterwards, I never flew United again, even when it meant paying more for a ticket, which I did. They were that bad, and that was pre-merger. And I never miss an opportunity to relay my terrible experience with them to anyone.
Bill @ 4:37 you’re just talking out your rear. Recent data show there are fewer routes and higher fares as a result of .mergers. These are facts, not speculation. You can Google about mergers and easily find info about it. Promises of consumer benefits never pan out. What’s good for short-term (nearsighted) shareholder gain is not good for the consumer.
UA has been great to me. I have had some inconveniences but have been reimbursed for all of them. Hopefully the US domestic business food will be half way decent next year.
However I think their upcoming revenue based rewards programs make absolutely no sense. I’m 1k and I will make out better than before, but they have already reeled me in as a loyal flyer…. Most 1k and all GS (who typically aren’t going to make anymore revenue based flights) get a ton more miles for not doing anything different. I bet Jeff Smisek gets a ton of letters from GS and 1k members selfishly saying that the upcoming rewards program is great. I could write a dissertation on why I believe UA’s upcoming revenue based rewards program is going to decrease UA’s potential revenue in both the short and long term………and also gives less incentive for lower tier elites to fly with UA….
I have just flown first class from Chicago-Maui on AA and returned on UA. Both were on miles. I was amazed at the difference between the two airlines. My vacation began the moment I boarded the AA aircraft in Chicago. AA planes and attendants treated us very well. Unfortunately, the same cannot be said for my return trip. I was sitting in a first class seat, however, the service was no different than that in economy last year. I used to be very loyal to UA back in the day before the merger. After my trip, I may be willing to buy a 1st class seat on AA, but definitely not on UA. One example…The one snack on the UA flight, beef burrito…for those of us who can’t eat beef due to health reasons….no snack for you. Another, AA attendant telling me my connection gate personally, UA no info. I hope the AA merger does not ruin AA’s premium service. We shall see.
I am GS of United, EXP of AA, and platinum of Air China. I has been at least 1k for many years. United has the best customer service for their elite member. Their hard product is the best compared to Cathay, SQ or EMirate, but it is OK. Almost all long haul flights has flatbed in J, even JFK to SFO. AA has limited network in Asia and their product is worse. You never expect the same kind of customer service from Air China although I am a Chinese.
For mid-level elites, the reductions in award change fees (used to cost $150 to change routing; now costs at most $25 to make changes, and changes to origin, destination, type of award, etc., are now allowed without having to redeposit old award and have new award issued) are a HUGE win. Also, free same day changes and same day standby are a big improvement.
As a lifetime CO Plat, and now a lifetime UA 1K, this merger hasn’t been too good for me AS A TRAVELER. But I was also a CO shareholder, and I still own shares in the new company. The shareholders have actually done pretty well — just look at a stock chart!
http://finance.yahoo.com/echarts?s=UAL+Interactive#
Most analysts on Wall St say that Smisek has underperformed his major competitors, and I generally agree with that analysis. That said, there are certainly some signs that he is closing the financial gap. We’ll have to see. In the meantime, though, I see no evidence that UA travelers are any happier. Perhaps this is not essential to their financial results. I hate to say it, but I was probably “over-entitled.” I was getting more than I paid for. Now I don’t get as much and, perhaps, that sum of money goes to the shareholders.