Courtesy: United Continental Holdings, Inc.

By Caroline Shin

The Department of Justice recently approved the $3 billion Continental-United Airlines merger that would create the world’s largest airline by the end of 2010.

The combined airline will have 21% of the domestic market share in terms of available seat miles–exceeding Delta’s 20% share—and 7% of the global market share. It will have 10 domestic hubs with flights to 370 destinations in 59 countries. To resolve competition concerns, Continental agreed to lease 18 pairs of takeoff and landing slots at Newark Liberty International Airport to Southwest Airlines.

So what does that mean for the travelers?

“There’s not going to be much of an impact to consumers—it’ll be only positive,” says Hunter Keay, an airline analyst at Stifel, Nicolaus & Company. “There will be greater consumer choices without much of an effect on pricing. There’s an overlap in very few markets so the competitive dynamics won’t change.”

Keay cites advantages from the merger such as increased flights on a much larger network, fewer chances to lose luggage between carriers and the opportunity to gain more frequent flier miles on one network.

“I don’t believe that the merger will have a major effect on domestic airfares because airlines know that they can only raise fares so high before travelers stay home or seek other forms of transport,” says George Hobica, founder of airfarewatchdog.com. “Also, with Southwest starting service from Newark in March, that will have a dampening effect on fares.”

Minnesota Congressman James Oberstar, chairman of the Committee on Transportation and Infrastructure, however, has criticized the deal since its announcement in May 2010.

“Airline consolidation brings consumers and communities fewer choices and less competition, usually leading to increased fares and reduced levels of service,” he said in a statement.

The U.S. airline industry will soon be pared down to four major carriers following a flurry of mergers that have already combined American and TWA, America West and US Airways, and Delta and Northwest

Continental and United Airlines assert, “We expect to achieve revenue synergies without any increase in fares,” on their website designated for the merger.

The airlines and their respective mileage credit and frequent flyer programs will operate independently until the close of the deal following a shareholder vote on Sept. 17.

The new airline will take on the United Airlines name and use Continental’s logo and colors.