The new Delta will be based in Atlanta, and Richard Anderson will be its chief executive.
The newly formed company is seeking to win Justice Department approval and complete merger formalities within the year. After the merger is approved, the airline is slated to be fully functional by 2012.
Will the Merger Be Beneficial for Travelers?
Delta’s merger with Northwest puts the combined airline in an enviable position to reap substantial revenues, analysts say. The financially stronger airline will be able to buy new planes and upgrade customer service.
Additional revenues and the relatively low cost structure of the combined company will put it far ahead of rival airlines.
The merged airline has promised that it will retain all present hubs, avoid layoffs, and not slash domestic flying drastically. The new company’s executives have also promised that frequent fliers enrolled with either Delta or Northwest will be offered a wide range of destinations.
The airline has also revealed its plan to act as a single carrier for U.S.-to-Europe services, a step which reportedly will offer travelers greater fare and route choices.
Will the Merger Hurt the Airline Market?
A legion of analysts, lawmakers, and consumer activists suspect, however, that the merged airline may not find it easy to fulfill these promises in view of rising oil prices and a weakening dollar. On the contrary, they argue that the merger will ultimately lead the airlines to raise fares and reduce the number of flights on some routes.
Moreover, lawmakers also fear more similar mergers in the industry soon. Continental Airlines and United Airlines are already exploring such a deal. Some fear that the increase in mergers will cripple the beneficial role of competition and allow powerful airlines to raise prices and cram planes with too many passengers. Furthermore, residents of smaller cities will be hit hard if the mergers result in less frequent service to smaller markets.
Will the Merger Be Successful?
Nonetheless, Northwest and Delta are striving to convince customers, employees, and policymakers about the benefits the merger will offer.
Company officials claim that Northwest and Delta compete with each other marginally on only a few routes. Besides, they say, the two airlines’ domestic networks would fit together very well.
Beyond that, the airlines hope that the Justice Department will look beyond market share and pricing, and also take into consideration oil prices and increasing challenges from foreign airlines.
Conclusion
The merger of the two giant airlines is perceived simultaneously as a great opportunity and a huge risk. Predicting successes and failures in the airline industry is not an easy task. Only time will tell the impact of the merger on the market.
