United-Continental Air Merger Challenged

     SAN FRANCISCO (CN) – Forty-nine air travelers on Tuesday asked the Federal Court to block the merger of United and Continental Airlines. The plaintiffs say the new airline, which would be the world’s biggest, would leave the U.S. air industry dominated by three major carriers, reducing competition in an industry already dominated by a select group of major carriers.




     United and Continental announced their merger on May 3; the new company would be called United.
     “We want to prohibit the merger because the airline industry is substantially concentrated already,” the plaintiffs’ lawyer Joseph Alioto said in an interview.
     “It will become far, far worse if this merger is allowed. And the government has failed to do anything about it.”
If the merger goes through, the complaint states, “the United States will be left with just three international airlines: the new combined United, Delta, and American.”
     The new United would surpass Delta as the world’s largest domestic airline.
The complaint claims that Continental CEO Jeff Smisek and United CEO Glenn Tilton held secret meetings in which they discussed firing employees, eliminating aircraft and routes and increasing fares.
     Alioto said the talks began on April 9, a little over a month after the announcement was made.
Alioto said he was concerned that the merger “will encourage American and U.S. Airways to combine as well, and we will end up with the same situation that we had with the banks: that these companies are too big to fail.”
The plaintiffs, whom Alioto described as airline passengers and small business owners who rely on air travel, demand that the airlines be prohibited from consummating the merger, which they say violates the Clayton Act.
“In our country, we believe in competition, not monopolies or combination,” Alioto said. “It’s highway robbery, only it’s very subtle. It’s not done with masks, but carried out by pickpockets.”

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