Merger partners United Airlines and Continental Airlines
agreed to maintain hub-level operations at Cleveland Hopkins International
Airport for at least five more years, or face a stiff penalty for failing to do
so.
As part of a deal disclosed this week with state officials
in Ohio to complete their proposed merger, the carriers agreed to keep at least
90 percent of their flights at Cleveland for at least two years and to maintain
hub-operational workforce levels for at least five years.
If the merged United fails to live up to this commitment, it
will have to pay up to $20 million in damages.
In return for that commitment, the state agreed to close an
investigation by the Ohio attorney general into the merger's likely impact on
the airport and state.
Attorneys general from California, Texas, Virginia,
Pennsylvania, North Dakota, New Jersey, Hawaii and the District of Columbia
also have been investigating the proposed merger, the U.S. Justice Department
recently noted.
There's been no word on the status of other investigations,
but the airlines' proposed $3.2 billion all-stock merger has already passed
Justice Department review. By most measures, the merged airline will be the
largest in the world.
Handshake deals between state officials and airlines to
maintain service in such cases are not uncommon. What is rarer, analysts say,
are the specific penalties and service levels publicly disclosed in this
agreement.
Cleveland was one of eight cities the two airlines named
this summer as domestic hubs for its merged network. The other proposed hubs
are Newark, Los Angeles, Chicago O'Hare, Houston, San Francisco, Denver and
Washington Dulles.
However, most analysts thought that Cleveland would be downsized
as the two airlines spliced their routes and networks.
State officials said the agreement will prevent that from
happening, at least for a while.
"Through this contractual agreement, the airlines have
committed to working with my office and the city of Cleveland to ensure that
[the airport] remains a viable hub for the foreseeable future," Ohio
Attorney General Richard Cordray said in a statement.
Continental is a powerhouse in Cleveland. In 2009, according
to state figures, Continental fliers made up 65.2 percent of the passenger
traffic to the airport, while United accounted for 5.4 percent.
This report first
appeared on TravelWeekly.com.