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September
19, 2000
New study shows expansion of single-carrier
service by merger of United Airlines and US Airways will also save
consumers money and make travel more convenient
CHICAGO,
September 19, 2000 – United Airlines today cited the findings of a
recently released University of Illinois study that identifies more
than $15 million in potential fare savings to domestic U.S.
passengers as among the benefits of the proposed merger of United
Airlines and US Airways. The study contends that the expansion of
single-carrier service resulting from the merger will create a
pro-consumer benefit both in terms of convenience and annual
consumer cost-savings. These savings arise because online
(single-carrier) passengers pay a lower fare for a given trip than
interline passengers, who split their ticket across two airlines.
The study was conducted by University of Illinois economist
Jan K. Brueckner, using the methodology of his recent study on fare
benefits from international alliances, along with 1999 domestic fare
data compiled by the United States Department of Transportation. To
compute fare savings, Brueckner used an independent estimate from
the previous research literature showing that, on average,
single-carrier (or online) passengers enjoy a 24 percent discount
over interline passengers.
"Consumers will save money
because it costs less to complete a trip using a single airline than
it does to use multiple carriers. As current interline passengers
become online passengers on the merged airline, their fares will
fall," according to Brueckner. The study shows the average price of
$530 for a combined United Airlines/US Airways interline ticket
falling to an average of $403 for online travel on the merged
carrier. This fare difference leads to benefits of more than $15
million for the traveling public.
"This study underscores
the many consumer benefits of this merger," said Chris Bowers,
Senior Vice President – North America for United Airlines. "As a
result of the merger, customers will enjoy more single-carrier
connections onboard an airline with a true national network, which
brings customers more convenient and – as the study indicates – more
economical travel."
The study also outlines how the proposed
merger would create single-carrier service for 162 domestic city
pairs in which online service currently is not available. According
to Brueckner, "These are small- to medium-sized communities
throughout the country that would benefit from more convenient
access to a larger number of destinations."
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