News You Can Use: What Mergers Mean for Travelers

Dec. 13, 2006 — -- In light of reported talks among airlines and potential mergers between major players like United and Continental, many travelers may wonder what it could mean for them in terms of cost, convenience, and those hard-won frequent-flier miles.

Mellody Hobson, "Good Morning America's" financial contributor and the president of Ariel Capital Management, shared her thoughts on what airline mergers could mean for the average traveler.

Although Hobson sees no chance of a merger between United and Continental happening before Christmas, ultimately, she believes, mergers between any airlines will result in higher prices, calling it a case of "simple economics."

"This kind of consolidation isn't great for consumers," Hobson said. "When there's less competition, prices go up."

Frequent-flier miles are not likely to disappear as airlines merge, Hobson said.

"The airlines understand that their most important customers are their frequent fliers," Hobson said.

Every year, 9.7 trillion frequent-flier miles go unclaimed, she said.

A potential merger between United and Continental makes for an interesting pairing, according to Hobson.

United dominates travel to the West and Asia, while Continental is dominant on the East Coast. A combined new carrier could expand routes across the world, she said.

"Bring those two together, and you end up getting a really great business," Hobson said.