United, Continental launch world's largest airline

United and Continental yesterday closed a deal creating the world's biggest airline, although it will be months before it looks that way to travelers.

By early 2012, travelers will see a combined airline called United Airlines, with Continental's blue and gold colors and globe logo on the tail.

Between now and then, the new company, United Continental Holdings Inc., will run the two as separate operations, with each airline's customers checking in at Continental or United websites and airport counters. Their frequent-flier programs will stay separate for now, too.

"A passenger, whether they came in 30 days ago, today or 30 days from now, will probably see no difference whatsoever," said Troy Bell, director of marketing and air service development at Richmond International Airport.

The two airlines serve markets from Richmond.

United provides six daily flights to Chicago and four daily flights to Washington Dulles International Airport.

Continental has five daily flights from Richmond to Newark, N.J.; three to Houston; and three to Cleveland.

The two carriers separately have been secondary players at Richmond International, but together they become a major player. Combined, they had about 18 percent of the local air-travel market in August.

"With more hubs and the combined schedule, it gives a lot more flexibility and redundancy to those taking them," said University of Richmond transportation economist George E. Hoffer.

"On the other hand," Hoffer said, "we lose one more independent carrier" to help keep ticket fares in check.

But, Hoffer said, overriding the impact of the United-Continental merger for Richmond travelers is this week's announcement that discount carrier Southwest Airlines plans to buy low-cost carrier AirTran Airways, which serves the Virginia capital region airport.

"Gaining access to the Southwest network . . . gives us the ultimate backstop of pricing abuse," Hoffer said.

Delta Air Lines holds the largest share of the Richmond airline market, with 28 percent in August.

Counting United and Continental separately, eight airlines now provide Richmond with 182 departures and arrivals daily.

Those flights carry about 3.3 million passengers a year, connecting the region nonstop to 19 destinations.

United Continental Holdings said travelers should begin to see a more unified brand in the spring.

Will they see higher fares, too?

Rick Seaney, CEO of FareCompare.com, said the economy will hold down prices in the short run. He expects reduced competition eventually to lead to higher fares -- the result of Delta's takeover of Northwest, Continental's disappearance, and Southwest's pending purchase of AirTran.

"If you take two carriers out, and a third pretty soon, prices are likely to go up," he said.

Airline pricing is notoriously fickle. Fares can rise on one route while falling on another because of competition, the economy and fuel prices.

Mergers don't automatically lead to higher fares.

Airlines are collecting less in fares per mile on domestic flights than they were before Delta Air Lines Inc. bought Northwest in 2008, thanks to the recession and competition from low-fare carriers. They have offset weak fares by raising billions from add-on fees for checking baggage and changing flights.

The U.S. had at least five major international airlines before Delta bought Northwest. Now it has three dominant international airlines -- United Continental, Delta, and AMR Corp.'s American -- and a big domestic hauler, Southwest Airlines.

United and Continental together carried 8.7 percent more traffic than Delta through August. The combined airline would have about 5,800 daily departures, versus Delta's 5,715.