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Mergers could boost fares

Fewer flights, more crowding also may occur

A Northwest Airlines plane is parked as travelers wait for their flights Tuesday at Detroit Metropolitan Airport. The merger of Delta Air Lines and Northwest Airlines, announced Monday, could be just the beginning of a wave of airline consolidations. The mergers could bring higher fares, fewer flights and even more crowded planes, industry observers say.

A Northwest Airlines plane is parked as travelers wait for their flights Tuesday at Detroit Metropolitan Airport. The merger of Delta Air Lines and Northwest Airlines, announced Monday, could be just the beginning of a wave of airline consolidations. The mergers could bring higher fares, fewer flights and even more crowded planes, industry observers say.

April 16, 2008

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— Getting hitched may be the right move for Delta and Northwest. But for beleaguered air travelers, it could usher in an era of higher fares, fewer flights, more confusion at the airport and even more crowded planes.

The merger could kick off a wave of airline consolidation. And while the effects would not be immediate because the combinations could take months to get regulatory approval, industry observers say get ready anyway for fewer carriers in the sky.

"It's not an industry that works," said Mark Cooper, director of research for the Consumer Federation of America, who lobbied Congress against a bid by US Airways for Delta last year.

"We're now getting to the point where there are so few carriers left, and they still can't make money," he said.

Mergers, combined with a recent spate of airline bankruptcies, mean passengers in many cities can expect fewer flights to choose from, and they'll be packed even fuller than they are now.

Greater demand for remaining seats translates into higher ticket prices.

"There's no doubt in my mind fares are going to go up," said Rick Seaney, chief executive of FareCompare .com, which tracks changes in airline ticket prices. "Consumers are deluding themselves if they think that's not the case."

Peter Schiff, president of brokerage firm Euro Pacific Capital, said the changes could put air travel out of reach for Americans of modest means.

"Although many Americans have come to regard affordable air travel as a birthright, from a global perspective it remains the province of the wealthy," Schiff said.

That could mean more headaches for travelers already reeling from a string of cancellations due to stepped-up scrutiny of safety regulations by the Federal Aviation Administration.

The merger announcement by Northwest Airlines Corp. and Delta Air Lines Inc., which would create the world's largest airline, has already ignited talks among other airlines as they seek to bulk up to combat rising fuel prices in a slowing economy.

Continental Airlines Inc. executives told employees Tuesday that the airline wants to remain independent - but warned "the landscape is changing" and said it would consider its "strategic alternatives."

The executives did not say what they might consider, but Continental has held talks with United Airlines in the past.

United CEO Glenn Tilton issued his own statement to employees Tuesday in which he called industry consolidation "one of the changes necessary" for the industry to get to sustained profits.

"We will participate in consolidation when and if it is the right choice and provides the right benefits for employees, customers and shareholders," Tilton said.

A Continental-United pairing would create an airline even bigger than the Delta-Northwest offspring.

Comments

Eride 6 years, 8 months ago

Suffice it to say, if you can, avoid flying on Delta Air Lines and Northwest Airlines for a few years.Airline mergers have a history of being disastrous for customers and because of the size of this one...Stay away!

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