Delta-Northwest merger: Just the tip of the iceberg?
17 April 2008
$31.7 billion revenue, 800+ aircraft, largest airline in the world – all very impressive, but does the American consumer gain anything? Or is he at a loss? Sourya Biswas reports.
If the Delta-Northwest deal does go through, the combined entity may not occupy the top spot on the airline stakes for long. For analysts believe that a successful merger between Delta and Northwest would trigger off consolidation in the airline sector.
At present, the US domestic market is served by six major carriers, which in order of revenue passenger miles (prior to the Delta - Northwest merger) are American Airlines, United Airlines, Delta Air Lines, Continental Airlines, Northwest Airlines and Southwest Airlines. Of these, except Southwest, all the others are full-service carriers. This list may well reduce to three if the much-awaited consolidation starts off with the Delta-Northwest deal.
In fact, Northwest's agreement to enter into the transaction with Delta enables Continental to buy back a "golden share" granted in 2000 that had allowed Northwest to block any merger efforts by Continental, which had then already discussed a possible merger with United Airlines - a possible merger which could create a behemoth bigger than the combined Delta-Northwest carrier.
Do consumers gain anything from the Delta-Northwest merger? As in most matters, there are two sides to the answer. While the airlines' managements have been vociferous in stating the ''benefits'' that customers will get from this deal not all consumer groups are convinced.
The companies had said through a combined statement that customers and communities would benefit from an expanded global route system and a more competitive, financially secure airline, ne of the strongest balance sheets among major US airlines, permitting the combined airline to invest in its fleet and services to enhance the customer experience.
They also said customers and communities would have a direct service between the United States and the world's major business centers. (See: The Delta - Northwest merger)
