Feb 18, 2008 11:01 pm US/Central
Impact Of A NWA/Delta Merger Depends Who You Ask
(WCCO)
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The red tail of the Northwest Airlines planes will be going away, if you believe analysts who say the Northwest name won't survive a merger. (File)
CBS
Business analysts agree that airlines need to merge to keep up with rising fuel prices and other financial pressures. So what does a merger mean for passengers and the people who work there?
The red tail of the Northwest Airlines planes will be going away, if you believe analysts who say the Northwest name won't survive a merger. Delta is the bigger airline of the two, which is also why business experts say Atlanta is a shoe-in to be the headquarters.
Delta's CEO has said in the past he wouldn't consider a merger unless Atlanta keeps that plum.
"We are losing another Fortune 500 company being headquartered here in Minneapolis. That's with pride to say that Northwest in headquartered in Minneapolis," said Dr. Sunil Ramlall, a professor at the College of Business at the University of St. Thomas.
He sees hurdles ahead which include the fact that Delta's flight attendant's are not unionized but could eventually be folded into the Northwest flight attendant union.
The two pilot groups have already worked out an agreement in principal, according to the Atlanta Journal Constitution. Yet an aviation consultant predicts most pilots aren't likely to be happy ultimately since pilot seniority will be adjusted.
"Pilots are never comfortable when you mess with the very fiber that determines their livelihood. So very, very uncomfortable when you mess with it. Almost never happy with the outcome when things are merged together," said Kit Darby, president of Air Inc.
As for passengers, airfare prices are a primary concern. Any economics professor will tell you that prices increase when competition decreases but this time, it's not that clear-cut. Most analysts predict airfare prices and service from the Minneapolis/St. Paul International airport won't change.
"We actually could benefit, Minneapolis and St. Paul could be set in a very good set-up," said travel consultant Terry Trippler. He said a merger could create openings for low-cost carriers like Southwest or JetBlue to come to MSP.
As for direct flights out of MSP, most analysts believe the route structure will remain the same. The two carriers don't overlap many routes, which is the reason the marriage seemed like a good match.
"The routes will stay the same. The same planes will be flying. It's just the color of the airplane, the red tail, might not be there anymore," said Ramlall.
Some analysts also predict Northwest Airlines CEO Doug Steenland would leave and Delta CEO Richard Anderson would head the world's largest airline.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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