Delta-Northwest merger comes under US Congress scanner

15 May 2008

New York: The US Congress on Wednesday examined a proposed $3.1 billion merger of Delta Air Lines with Northwest Airlines, which would result in the creation of the world's largest airline. The deal is attracting attention, and scrutiny, not just for its size, but also for the apprehension that it could drive up the price of air travel.

In his opening statement, committee chairman, James Oberstar, said the merger would have far-reaching ramifications for the global airline industry.

"This should not be and must not be considered as a standalone, individual transaction but rather as the trigger of what will surely be a cascade of subsequent mergers that will consolidate aviation in the United States and around the world into global, mega carriers," he said.

Oberstar, a skeptic, said the Delta-Northwest merger would discourage competition at major hubs, reduce service to customers and result in higher fares.

This perception is contested by Delta chief executive officer, Richard Anderson, who said that the merger would not limit competition because the carriers primarily serve different geographic regions. Delta focuses domestically on the East and the "mountain" West and internationally on Europe and Latin America, while Northwest's domestic strengths are in the Midwest and internationally in Asia.

He pointed out that the companies overlap only in 12 markets.