If USAir is taken over by United, the impact will be far-reaching

The Outlook

November 12, 1995|By Suzanne Wooton

A DECISION by United Airlines on whether to pursue a takeover of USAir is expected this week. The prospect of a merger between USAir and United has enormous significance nationwide, including at Baltimore-Washington International Airport, where USAir carries more than half the 30,000 daily passengers.

What might happen to service and fares should the two team up to form the world's largest airline? And would such a marriage spark more consolidations in the industry?

Timothy F. Sieber

Vice president, research, Aviation Systems Research, Golden, Colo.

Across the board, I think we'd have a more consolidated industry. If there were a United-USAir merger, you'd see a wave of other mergers go through, and probably we'd emerge with three or four strong airlines controlling the nation's major air routes. Fares would climb up, though potentially you could see some fares go down in some areas since [United President Gerald] Greenwald has it in his head he's going to duplicate United's shuttle on the East Coast.

I think Pittsburgh and Charlotte are safe as USAir hubs, but you might see a decline in Baltimore. Dulles has emerged as major international gateway, and they might want to shift some domestic service from Baltimore to Dulles to feed the international routes.

Dan Kasper

Transportation consultant, Coopers & Lybrand, Boston

The largest carrier in the industry is proposing to acquire the fourth largest. By all the normal measures [the Justice Department uses], like concentration indices, this would set off red flags waving. I think it's possible [a merger] would force American, Delta, Northwest and Continental as well to look very carefully and ask "do we need to combine resources to compete effectively with a combined USAir and United?"

There's a substantial amount of route overlap between United and USAir and those would be logical places you'd expect to see reduction in service. That would result in a substantial reduction in competition. But I think a merger of those two carriers faces a number of very serious hurdles. If the Justice Department were to approve it, or not contest it, then higher fares are a possibility.

It's conceivable that service in Baltimore would be cut if such a merger would take place. Baltimore might see a scale-down by USAir and United, but other airlines would see it easier to move into a city like Baltimore than go head to head with USAir and United in Philadelphia, for instance. I think Baltimore is likely to be well-positioned to maintain a good level of competition.

Nicholas J. Schaus

Deputy administrator, BWI Airport

There are 10 million people who are local origin and destination travelers (people who either begin or end their journey) at BWI, while 3 million change airplanes here. There's an extremely strong origin and destination base here and that's not going to be ignored if there is a merger with USAir and another carrier.

The fare situation will be dictated by the marketplace. We're building six new gates for Southwest Airlines. They get a minimum of 10 flights a day from each gate at most airports. That's a significant force that will have a strong impact on fares. Southwest also just made a decision to go into the Florida market. So I believe the marketplace will come into play.

David Stempler

Travel consultant, Washington, D.C.

The opportunity to get a shuttle by United on the East Coast would be really terrific. We might get some of the benefits of the fare wars occurring on the West Coast as United stakes out its place.

The big debate for BWI is Philadelphia to the North and Dulles to the South. Would United decide to focus more feed traffic into Dulles? There's no reason, however, that United couldn't use Dulles as a big hub and BWI continue to be a facility for low-fare service. They can be at both places. They could use Dulles as a full-service airport and BWI, the lesser used airport that people will drive to, for United's East Coast shuttle.

Tammi Scheetz

Research director, InsideFlyer, Colorado Springs

United and USAir are very different in many areas, including their frequent flier programs. United has expiration dates on its miles but USAir's miles never expire. We don't think they would combine the frequent flier programs, but if they did they would probably give (USAir) members six months advance notice to use their (older) mileage.

I don't feel that United would jeopardize its customer loyalty. I think they would come to some kind of compromise. Continental and America West have a close partnership. You can earn miles or redeem them on either. If USAir and United merged, the good thing is you would be able to earn mileage by flying on more and more routes.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.