Airline mergers: half the competition, double the mediocrity

This week I flew Continental Airlines for the first time since it was acquired by United — and in fact the first time in three years. Where once Continental competed for customers with superior service, today — just as I feared — it offers the same customer hostile-policies that its corporate parent has so carefully pioneered over the past decade. The jetbridge slogans promising a better customer experience are just so much empty rhetoric.

If the processes have changed with the merger, so far the people have not. The Continental employees seem pleasant enough — certainly not like the surly TWA cabin crew in the years leading up to their acquisition.

Perhaps the Continental culture of pride and perhaps empowerment has yet to be destroyed by the penny-pinching bureaucracy that is the world’s largest airline. Or perhaps the Texas hospitality temporarily lingers, just as Delta once had a Southern charm before that was ground down by commoditization and its acquisition of an unhappy struggling airline.

There’s really nothing new here: big companies would rather force us to buy what they offer rather than compete for customers. Bigger is rarely better, except for the CEO egos and their paychecks. Mergers have not created better airlines, just ones with more market power and less accountability

Which of course brings us back to SBC, America’s largest telecom company, and its efforts to control 40% of the US cellphone market through purchase of T-Mobile USA. It's been over 10 weeks since the proposed acquisition was announced, but no real news from the FCC.

As with airlines, the promises of AT&T similarly ring hollow. At least United can offer some new destinations to its customers after gobbling up Continental.

Would the purchase of T-Mobile allow AT&T to serve another square mile that it doesn’t already cover? I doubt it, but it will end T-Mobile competing with AT&T to win customers.