Continental / United Merger Approved by DOJ – Outsourcing of Flights to Regional Partners is a Central Issue

Continental and United airlines have assigned a large share of their domestic flying to regional partners. Under their proposed merger, they both want to keep using these partners to help transport their passengers.


Continental

Continental Chief Executive Jeff Smisek, who will lead the merged airline, has made clear that he wants more latitude to outsource work.

The Houston-based carrier today has one of the industry’s most restrictive scope clauses. Regional carriers flying for Continental may use jets with no more than 50 seats.

The rule allows Continental partners to fly bigger turboprop planes, with 74 seats, but they account for a very small part of the overall fleet. None of those big propeller planes currently serves Hopkins.

Continental earlier this year offered its pilots the same terms Delta Air Lines pilots have in their industry-leading contract, plus $1 an hour. The Delta contract allows outsourcing on 70-seat aircraft.

United pilots agreed to relax their scope terms in negotiations during the company’s bankruptcy, allowing regionals to fly 70-seat jets.

If a merged United-Continental had subcarriers flying 70- and 90-seat jets, that also could change the makeup of the combined carrier’s fleet in Cleveland, said Todd Payne, director of air service director at Hopkins.

It might allow the new airline to revive destinations from Cleveland, such San Antonio and Austin, Texas, that were dropped when fuel prices spiked in 2008, he said. Routes that don’t make sense in a 50-seat jet can become profitable with a jet holding more passengers.