Merger would have a big-city impact
A merger between Delta Air Lines and Northwest or United would greatly extend the reach of the resulting airline, giving it influence over service and fares in more major U.S. business markets than any of them has today.
A Delta-United deal would be an industry game-changer, giving the combined carrier heft in eight of the nation's 12 biggest business markets, according to a USA TODAY analysis of schedule data from OAGback Aviation Solutions. The analysis combines the current shares of each carrier in the big markets, establishing a rough estimate of the share the combined carrier might control.
None of the airlines has publicly confirmed merger talks, but outsiders last week, including U.S. Rep. James Oberstar, D-Minn., confirmed Delta-Northwest merger talks and the possibility that Delta-United talks could heat up.
Either deal would create the nation's biggest airline. Delta-United would command a 25 percent share of all seats on U.S. flights; Delta-Northwest, 22 percent.
A Delta-United combination would command significant market shares in Boston, New York and Atlanta, where Delta is strong, as well as Washington, D.C., Chicago, Denver, San Francisco and Los Angeles, where United operates hubs.
A smaller, Delta-Northwest combination would command significant market shares at five of the top 12 U.S. business centers: Boston, New York and Atlanta, along with Minneapolis and Detroit, cities where Northwest dominates.
Delta's domestic hubs don't overlap United's or Northwest's, so neither combination would result in big market share increases in any individual markets.
But all three of the carriers depend heavily on revenue from business travelers, who tend to pay higher fares than leisure travelers and travel more often. The impact of either combination would be felt most by business travelers and their companies.
"One thing business travelers would face is higher fares" on more routes involving big business markets, said Jon Ash, president of Washington-based consultant at InterVISTAS-ga(2).
On the upside, Ash said, "The consumer benefit would be more and better service" from a larger and ostensibly healthier airline. Because all three carriers have extensive international routes, either deal would give the merged airline clout in more of the most-lucrative business routes to major international markets in Europe, Asia and elsewhere.
In an e-mail Friday to employees at No. 2 United, CEO Glenn Tilton signaled the Chicago-based carrier might be exploring options other than a Delta deal.
"Our position has always been that we control our decisions; no one makes them for us," he told workers. "The advantage of our situation is that we have choices we continue to consider with our board."
Former Continental CEO Gordon Bethune said in an interview Friday that consumers, particularly business travelers, would benefit from airline consolidation because it would strengthen and stabilize large U.S. carriers vulnerable to boom-and-bust cycles.
Delta, Northwest and United all were forced into Chapter 11 bankruptcy in recent years, forcing cuts in flights, onboard amenities and jobs.
"Do you really want to see another round of failure?" Bethune said. "With $100-a-barrel oil, there's going to be another round unless somebody does something to prevent it."
Bethune advises New York-based hedge fund Pardus Capital Management, which holds stakes in both Delta and United and wants them to merge.
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