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Delta-Northwest Merger Could Raise Fares

February 21, 2008 01:29 PM
by Anne Szustek
A merger between Delta and Northwest airlines could mean fewer seats and deals and higher fares. The negotiations should conclude this week.

30-Second Summary

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Should it go ahead, the fusion of Delta and Northwest airlines would create the world’s largest airline in terms of air traffic.

But the merger could also cause problems for airline passengers. The reduction in competition could, some argue, lead to fewer travel deals and higher fares, especially for travelers going to remote locations or via smaller hubs.

"If all the planes are full," Rick Seaney, founder of fare search site FareCompare, "they can increase prices and have them stick."

Larger hubs, like Los Angeles and New York, aren’t likely to be affected since they are served by many competing airlines.

The boards of the two airline carriers were expected to vote on the deal Wednesday. But the Salt Lake Tribune was more cautious than many papers, leading its story with “Expect Delta Air Lines and Northwest Airlines to announce a merger agreement today. Or tomorrow. Or Friday. Or next week. Or possibly never.”

The approval of the Air Line Pilots Association, though not essential to the deal, could be a stumbling block. Pilots are concerned about losing seniority in the new employee lists, which could affect the aircraft they fly, their salaries and job security.

Another obstacle is that Delta has stated in the past that if they combine with another carrier, they want to remain based in Atlanta and to keep the airline’s name.

High fuel prices are one reason consolidation is such an attractive option for airlines. There have also been rumors of Continental and United airlines thinking about a merger, which would form an even bigger airline than the Delta-Northwest deal.

Headline Link: ‘Northwest Merger Could Mean Fewer Cheap Seats’

Opinion & Analysis: Airlines, passengers, pilots and the merger

Reference: The Airline Pilots Association

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