What would Delta-Northwest merger cost flying public?
The deal could lead to further airline consolidations.
Skepticism about the proposed consolidation of Northwest and Delta airlines is growing by the day.Skip to next paragraph
Subscribe Today to the Monitor
The merger, which has been talked about for months and was finally given a green light by the companies' boards on Monday, would create the world's largest airline. If approved by regulators, it's also expected to unleash an unprecedented round of consolidation in the aviation industry that could cut in half, from six to three, the number of major network carriers that serve the nation's traveling public.
Aviation industry watchdogs and Wall Street analysts are eyeing the deal from different perspectives.
In general, Wall Street analysts favor the merger as a way to increase efficiencies and bolster the companies' financial stability as they cope with record fuel prices and international competition.
Consumer advocates counter that the merger will decrease aviation competition and bring in even worse service and higher prices. But there is one thing that both advocates and opponents agree on: If this merger is approved, it has the potential to bring about a major transformation of America's aviation system and federal regulators must be ready to address that.
"We are at one of those defining moments where a tectonic change is occurring," says Robert Mann, president of R.W. Mann & Co., an aviation analyst in Port Washington, N.Y. "We have to look at what this portends for an industry that is about to change radically."
Congress is already planning hearings on the deal. The chairman of the House Transportation and Infrastructure Committee Rep. James Oberstar (D) of Minnesota criticized the Delta and Northwest merger when it was first rumored three months ago.
Representative Oberstar remains concerned that if the merger is approved, it will spur other major carriers to consolidate to compete with the bigger carrier.
"He feels that will necessarily bring about a degradation of service, loss of competition, higher fares, and a loss of jobs," says James Berard, communications director of the House Transportation Committee. "This is for the stockholders. It's not necessarily going to benefit the employees and it's not necessarily going to benefit the traveling public."
The two airlines say this marriage between the Minnesota-based Northwest with its Atlanta-based competitor Delta will be a boon for customers, ushering in better service, more choice, and "competitive fares." They're calling it the nation's "Premier Global Airline." At a press conference Tuesday morning, Northwest CEO Douglas Steeland and Delta CEO Richard Anderson praised the deal as one that will bring about "a seamless, global network" that will create the ability to compete with other international, global airlines.