=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/c/a/2008/11/06/DDCJ13TN8A= .DTL --------------------------------------------------------------------- Thursday, November 6, 2008 (SF Chronicle) Delta, Northwest merger means fewer choices Ed Perkins, Tribune Media Services By now, you've probably seen the news that the Department of Justice has signed off on the merger of Delta and Northwest. Although important interests still oppose the deal - including some of Minnesota's congressional delegation and big user and consumer groups - I think that nobody will be able to derail it. And despite the propaganda you'll see and hear from the airlines involved, the news for consumers is generally bad. Here's my take on the winners and losers: Losers -- Air travelers, generally. As far as I can tell, the fundamental purposes of the merger are: (1) to reduce competition and make it easier to increase fares, and (2) to enrich the dealmakers and top executives. The airlines claim that greater "scope" of the combined lines will benefit consumers, but that's largely smoke: Through alliances, travelers could already take advantage of worldwide scope. The basic fact remains that fewer separate airlines mean a better opportunity to increase fares - and one fewer player to start a nationwide fare war. -- Northwest's employees, generally, plus many Delta rank-and-file workers. Nothing has yet been announced, but I suspect that a disproportionate number of job cuts will come from Northwest's ranks, not Delta's. And the goal of "saving" a couple of billion dollars a year basically means job losses. -- The Minneapolis metro area and probably the Memphis and Cincinnati metro areas. Minneapolis will lose quite a few headquarters jobs - plus, probably, lower-level jobs, as well. Northwest's comparatively small Memphis hub is too close to Atlanta to survive for very long. And Delta's second-tier Cincinnati hub is too close to Northwest's major Detroit hub for comfort in Cincinnati. Possible losers -- Travelers to and from small cities. Cities that enjoy separate, small plane service to both nearby Delta and Northwest hubs are likely to lose one of those routes. -- Both lines' frequent fliers. The lines will pitch the merger as a benefit: Delta fliers can go to all those great Northwest places, and Northwest's fliers get access to all those wonderful Delta destinations. But the merger will create fewer, rather than more, total seats, and it won't be any easier to get to Hawaii, Europe or Asia for either lines' passengers. Instead of just one line's fliers, the merged lines will have more chasi= ng the available seats. In addition, it's an almost sure bet that the new line will retain Delta's new three-tier award schedule, which (as I've previously discussed) amounts to a significant devaluation of accrued frequent-flier miles. Consumers won't lose any miles, but they'll probably find them harder to use, not easier. -- The corporations that pay for business travel. The Business Travel Coalition, the country's largest independent organization of companies that buy travel, opposed the merger - and those folks know their marketplace. Winners -- Delta's management and staff. Although presented as a merger, this is more like an acquisition. Delta will emerge as the dominant organization; the corporate headquarters will be in Atlanta, and Delta's corporate culture will prevail. Uncertain -- Other airlines. Industry pundits have been saying that any merger between two of the giant "legacy" lines would set off a merger spree among the remaining giants (American, Continental, United and US Airways), possibly including some of the next tier of lines as well (AirTran, Alaska, Frontier, Hawaiian, JetBlue). But that may not happen as quickly as the pundits have predicted. Continental has already shied away from mergers with any other line, and talks between United and US Airways don't seem to have gone anywhere. Some lines are more interested in cross-border mergers: American and British Airways, for example, would love to get together in some way. For now, U.S. law prevents foreign controlling ownership of any American airline beyond 25 percent, but the Europeans are pressing hard for a relaxation of that rule as part of the ongoing "open skies" negotiations. My guess is that outright cross-border mergers won't happen anytime soon, but you can look for more extensive "cooperation." Obviously, I see mostly bad results from this merger. I just hope I'm wrong. --------------------------------------------------------------------= -- Copyright 2008 SF Chronicle <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".