The price is … vague:

Customers may choose FareLock when booking reservations at continental.com and opt for a 72-hour or a seven-day hold. They may return to complete the transaction at any time between purchasing the lock and its expiration, or they may choose an auto-ticketing feature which tickets at the end of the lock period. FareLock fees, beginning at $5 for a 72-hour hold and $9 for a seven-day hold, will vary based on a number of factors such as the itinerary, number of days to departure and the length of the hold.

So essentially, Continental is selling you a call option on an airfare, with the “call” expiring in either 3 days or 7.

(When Continental starts selling puts, as well as calls, call me… Can you imagine the secondary market?)

This could be useful for some people, if the fare is rock-bottom enough and worth buying insurance for. But remember, if you can figure out your plans within 24 hours, you don’t need such an insurance policy in the first place. After all, Continental still offers a 24-hour flexible booking policy, meaning that you have 24 hours from the time you purchase the ticket to cancel for a full refund, for any reason.

Interestingly, the press release reaffirms the existence of the 24-hour flexible booking policy, so the company is seemingly signaling that the courtesy-cancel isn’t going away. That’s good.

It’s not clear how much demand there really is for such a service. If the price is too high, that demand will disappear really quickly. For now, I’ll most likely rely more on the 24-hour courtesy-cancel, but it’s good to know there’s an insurance option available.

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Downgraded: Amex Platinum benefits
As readers have reminded me: Starting September 2011, American Express Platinum cards will no longer give you free access to Continental President’s Club airport lounges. (I thought I had blogged about this in the past, but a quick search proves that memory was fuzzy: I hadn’t actually posted about it, just written about it briefly in the comments to a post about American Airlines Admirals Clubs launching free drinks domestically.) With Continental cutting access to Amex members, I assume this means that United won’t be scrambling to join up, either…

Downgraded: Air marshals from first class
It’s historically been easy to spot the air marshal onboard a flight: The guy with the short hair in an aisle seat in the last row of first class. Maybe not much longer. “Airlines are asking the Federal Air Marshals Service to relax its policy of often seating undercover agents in first class because they say it has become a costly disruption that isn’t justified by current security threats.” Looks like your upgrade chances might improve!

Upgraded: The love of flying
Some people love flying. Really, really love it. Love it enough to build their own airplane in their backyard, even though they never had aerospace engineering training. While I fear for the test flight, I admire this gentleman’s moxie and truly wish him the best of luck.

But much as merging airlines face internal strife over the seniority lists of pilots and flight attendants, who has the “seniority” among customers with similarly-fat elite-qualifying mileage balances? As of late yesterday, that’s been clarified.

For travel on Continental:

When seats are available, upgrades are automatically confirmed by elite level*. The chart below details when an upgrade may be confirmed, and if your benefit can be shared with one guest traveling with you on the same reservation.

* Premier Associate® members are not eligible for Elite upgrades on Continental.

For travel on United:

This is an adaptation of what I’ve been able to glean from the United and Continental sites:

It’s interesting that United is lumping all Continental elites with Star Alliance Gold status together in the same basket, while Continental is differentiating within the United-internal hierarchy. I suppose this indicates that Continental’s IT systems are more nimble than United’s which comes as no surprise. The end effect: Those on the very top of the United food chain come out slightly ahead of those on the Continental scheme.

In any case, United elites will still be favored on United aircraft, and Continental elites will be favored on Continental aircraft.

And best of luck clearing those upgrades, regardless of the color and design of your card…

Downgraded: Starwood’s top hotels’ redemption options
Gary Leff makes a great point in criticizing Starwood’s outrageous redemption rates for its most expensive hotel rooms. I like the Starwood Preferred Guest program generally, but 100,000 per night for some of those all-suite hotels in locations like French Polynesia? Come on, people.

Upgraded: Star Alliance Africa options
Star Alliance has invited Ethiopian Airlines to join the alliance. This is the third African airline in Star (South African Airways and Egyptair are the others). In the other alliances, SkyTeam has Kenya Airways, and oneworld has… no one. Africa is expected to be a major growth area for air travel — and for economic activity generally — so expect to see further invitations like this within all three alliances.

Upgraded: Las Vegas as a lair for supervillains
In a cross between the laser satellite run by a Las Vegas kingpin in “Diamonds are Forever” and the Death Star’s destruction of the planet Alderaan in “Star Wars,” we now have a Las Vegas hotel that channels the sun’s rays to create a “death ray” of sorts in the middle of the Vegas Strip. Unfortunately (or fortunately?) it’s unintentional… And if you’re a guest at the Vdara Hotel, it could be problematic: “[...] a visitor from Chicago tipped off [the Las Vegas Review-Journal] after having his hair singed, and his plastic shopping bag partially melted, while trying to lounge by the pool.” Here’s a diagram from the paper, via Minyanville:

Take Continental’s latest fare sale to Europe, for example. It’s notable for being early. Summer isn’t over yet, and we’re seeing late summer and early winter biz sales.

The fares are solid, such as $1272 from Newark to London roundtrip, $1370 to Paris, or $1420 to Frankfurt.

Dates?

1. Depart November 21 through 27, 2010, returning November 25 through December 1, 2010.
2. Depart December 20, 2010 through January 7, 2011, returning December 24, 2010 through January 13, 2011.

The fine print has both good news and bad news. Bad news: fuel surcharges. Good news: You can fly airlines other than Continental, such as Lufthansa. (Continental is rolling out upgraded flat seats in their “BusinessFirst” class, but the rollout is far from complete as of this writing.)

Fares listed do not include fuel surcharge. Round-trip travel required. Advance purchase of at least 21 days required and must be ticketed within 72 hours of booking. A minimum three-night stay is required. Fares are nonrefundable and require a $400 change fee. Not combinable with any other fares. Other restrictions apply. Offers are only valid for flights on Continental, Air Canada, Lufthansa and United. December travel period excludes flights to Bristol, Delhi, Mumbai and Tel Aviv.

Continental may be early on this, but other airlines are bound to follow suit. And there’s always the all-premium class OpenSkies connection from Newark or DC to Paris, which is currently running $1530 roundtrip fares, but that’s likely to go lower as we enter fall…

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Bringing Southwest into Newark is a big deal. Southwest hasn’t flown to a New York airport yet (correction: they have had flights from LGA to Chicago and Baltimore since June 2009… sorry about that!) — and no, their flights to Islip, NY are not New York City. It’s a major move into a huge market, and it’s to Newark, which is arguably the easiest and most convenient airport to access from Manhattan, despite being in New Jersey.

Especially if it goes above and beyond these initial slots, Southwest’s presence will mean lower fares at all the NYC airports, so New Yorkers can look forward to the greater competition.

No word yet on the specific routes Southwest will fly out of Newark, once it starts up.

Update: Just hours after the announcement related to Newark slots, United and Continental received clearance from the US Dept of Justice, paving the way for the finalization of their merger. Stockholder approval is still required, but the two airlines are expected to be merged into one company by October 1, 2010. Ta-daaaa.

It’s not clear if it’s coincidence or providence, but United is “celebrating” by offering a free alcoholic beverage to each passenger in Economy Plus from August 6 to 16.

But don’t let the free drinks distract you. The real issue is the merger going forward, and what that means for customers. And while there are no concrete changes being announced, there are telegraphed changes through the shifts in the management lineup.

While the Continental CEO will be at the helm of the combined firm, the frequent flier program will be managed by a United executive. United execs also take the COO and CIO position. (I just hope that the CIO adopts more of continental.com than united.com…)

So, in all likelihood, the mileage program will look more like MileagePlus than OnePass. Gary Leff has speculated some on the direction that the program will take under the merged airline, and I agree fully with his assessments. Most importantly, during a transition period immediately following merger, the two programs will likely feature the best of both worlds.

Check out Gary’s comments for a glimpse into what will likely happen on the mileage front.

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Assuming that federal regulators don’t put a stop to this, the newly combined airline (“Continited”?) will drop the Continental name and operate under the United banner. However, Continental’s CEO Jeff Smisek, will take the reins, with United CEO Glenn Tilton stepping back to the salutary title of “non-executive chairman” for two years. In other words, it’s Continental’s executive team, with United’s name, in United’s headquarters building. Assuming that current market shares simply transfer over to the combined entity, the merged United would have 21% of domestic ASM (available seat miles, i.e., market share) and 7% of global ASM, making it the biggest American player.

(Will this put an end to the on-again-off-again wooing of US Airways by United, in a seasonal display reminiscent of a National Geographic wildlife special? I sure hope so. It was growing tiresome.)

As I have argued several times over the years, these airline mergers are anti-consumer. True, there is no overlap between the United and Continental operating hubs, but a merger will give “Continited” a great deal of pricing power. Instead of re-inventing the wheel, here’s something I wrote in January 2007, that still holds true today:

Sure, you might get a few more potential destinations or routings for your flights, but the total number of flights is bound to be cut, and prices in turn are bound to rise. With less competition, it’ll be easier than ever to raise fares and make them stick.

The caveat to the “mergers mean higher prices” argument is that cuts in capacity (and increases in prices) eventually are met with new market entrants. Relatively constant demand is met with entrepreneurs wielding fresh supply. (The rise of JetBlue can, at least in part, be seen in the context of the disappearance of TWA and PanAm, through merger and bankruptcy, respectively.) The benefits to the merger participants are short-lived, and it’s debatable whether they actually pay off. Think back to past mergers: Is American really eating everyone else’s lunch since they bought TWA?…

In fact, the merged airlines’ competitors may benefit more. As fares rise, the companies that aren’t part of the merger arguably benefit more than the merger participants, because they get to raise their prices, without having paid the price of the merger…

So if consumers lose, and merging airlines don’t really win for very long, then who is the real winner in all this?

The answer: the CEOs, and the Wall Street investment banks advising them.

As the folks at Morningstar’s Footnoted.org blog noted earlier last week, the real motivator for a deal here isn’t “synergy” but “payday”:

We’re sure there are plenty of operational reasons United’s management might be looking for a deal. But we also couldn’t help noticing that the company has made it substantially more attractive for the top officers themselves to seal a deal — in the case of Chairman and Chief Executive Glenn Tilton, more than three times as attractive as in prior years.

According to the proxy that UAL Corp., parent of United Airlines, filed at 5:25 p.m. on Tuesday, Tilton’s payout if there’s a change of control rose to $9 million last year — up nearly fourfold from the $2.4 million listed in last year’s proxy. If he loses his job within two years after a deal, his payout would be $14.3 million, up 78% from $8 million last year.

Loses his job within two years? Why yes, that’s exactly what’s planned. What a coincidence!

It’s not just United’s current CEO who’s getting the big payday, either:

Other executives have seen similar jumps. Executive Vice President John Tague, also president of United Airlines, would see his payout in a change-of-control rise to $3.7 million, from $1.1 million. Total cost for the top five officers under a change in control scenario, even if none of them are fired: $17.6 million.

Footnoted’s post on the subject is worth reading in its entirety.

FYI: I am unable to get search results from the SEC’s EDGAR database right now, so I can’t see if there’s a merger bonus in the cards for Continental’s Smisek or not. (Try searching for yourself, using Continental’s stock symbol “CAL.”)

In coming days, you can expect the usual parade of executives touting the benefits and synergies of the merger. Don’t believe them. This merger is about them, not you.

Related posts from yesteryear:
- What will airline mergers mean to consumers?
- (Flashback to 2006) What’s in the cards for a United-Continental merger?
- (Flashback to 2008) Merger do-si-do: Continental spurns United, but other partners are ready to dance

Downgraded: Meals on Continental
Continental Airlines has finally thrown in the towel and is giving up the free meals in coach. Instead, they’re instituting a buy-on-board program. Maybe I’m suffering from Stockholm Syndrome, and I’ve become assimilated by my airline captors, but this doesn’t bother me much. Yes, it’s the end of an era. But I’ve moved on. So have others. The problem, for me, is that Continental is taking another page from its colleagues in the industry and spinning the removal of an existing amenity as an upgrade.

Upgraded: Flight Attendants’ Demands
Flight attendants, represented by the Association of Flight Attendants, want training in hand-to-hand combat. I think they’re right. Other demands: portable communication devices for speaking to the pilots (makes sense); standardized (read: smaller) carry-on sizes, “so that flight attendants can look for suspicious passengers instead of struggling with oversized bags” (makes sense, but let’s not go Ryanair on sizing); shutting down onboard wi-fi during periods of “high threat” (this is particularly subject to abuse).

Upgraded: Airline Seat Ratings in Brazil
The Brazilian government is taking an interesting and unusual step: requiring airlines to grade their legroom for their aircraft. It’s like an officially-sanctioned SeatGuru, without the specific-seat-level unit of analysis.

Downgraded: Aircraft Air
This is not particularly comforting: 1 in 2000 flights has a “fume event,” which often involves the intrusion of contaminated air into the cabin. In a recent incident, engine oil seeped improperly, was vaporized, and spread through the cabin. Tricresyl phosphate in the oil can cause neurological damage. Awesome.

Downgraded: Continental exit row seats
Starting March 17, exit row seats will cost you extra money, unless you’re a Continental OnePass elite member. (United elites get it for free eventually, too, but not yet.) No big surprise, given the industry as a whole. But as David Jonas argues, this is actually a meaningful shift by Continental, whose management had been more resistant than other airlines’ leadership to charge fees for things that were previously free.

Downgraded: Luggage scanning at Denver
For a few days, thousands of checked bags were not scanned by TSA at Denver. No further comment.

Upgraded: All-you-can-drive toll payments for Bay Area rental cars
If you’re renting a car in the Bay Area from Dollar or Thrifty, you’ll be able to buy a “Pass 24″ add-on for $9.95 per day or $39.95 per week (5-7 days) that includes unlimited use of all tolls in the region. The service is run by Rent-a-Toll. I guess it’s a deal if you’re crossing a lot of bridges. Just be sure to use the FasTrak lanes.

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