Apr 16, 2008
The British have been far more critical than our own business journalists about the proposed merger of Delta and Northwest Airlines
From the Wall Street Journal to Barron's, from Fortune magazine to Conde Nast's Portfolio, from the business section of The New York Times to the Motley Fools: scarcely a word criticizing the merger between Delta and Northwest Airlines. Instead, a constant, almost-mindless repetition of the headlined reasons for the deal: "a natural industry shakeout," "high fuel costs and the economic downturn," "synergy" and "increased efficiency," a step that will "strengthen the U.S. aviation industry without harming consumers".
The British have a different take on the matter. If you'll go to Travelmole.com, a leading UK website reviewing the aviation industry, you'll find a devastating rebuttal of each and every one of the suggested reasons for this awful merger, a careful listing of the dishonest claims, a searing appraisal of the rather-standard corporate minds that brought it about.
It isn't necessary, say the British, to focus on the personal self-interest of the airline executives (and their associated lawyers and investment bankers) who are proposing these mergers, of whom some will undoubtedly make tens of millions of dollars in fees and other payments at the conclusion of the arrangement. The same consolidation will enrich the very same managers, lawyers and bankers who presided over the earlier bankruptcies of several of these carriers. The merger of Delta and Northwest, say the British, will cost approximately 5 billion dollars to implement, an expenditure that cannot possibly be offset by any claimed savings.
Such a merger, they claim, "won't improve the quality of customer service, could easily increase costs and reduce efficiency, and would increase overall financial risk". The only way to avoid those consequences is for the newly-merged airline to exploit the consumer and/or prevent low-cost carriers from continuing to operate.
The purpose for creating mega-carriers, in other words, is to lessen competition. I will be writing further about this dreadful merger in the weeks to come.
Write and read comments about this post.
The British have a different take on the matter. If you'll go to Travelmole.com, a leading UK website reviewing the aviation industry, you'll find a devastating rebuttal of each and every one of the suggested reasons for this awful merger, a careful listing of the dishonest claims, a searing appraisal of the rather-standard corporate minds that brought it about.
It isn't necessary, say the British, to focus on the personal self-interest of the airline executives (and their associated lawyers and investment bankers) who are proposing these mergers, of whom some will undoubtedly make tens of millions of dollars in fees and other payments at the conclusion of the arrangement. The same consolidation will enrich the very same managers, lawyers and bankers who presided over the earlier bankruptcies of several of these carriers. The merger of Delta and Northwest, say the British, will cost approximately 5 billion dollars to implement, an expenditure that cannot possibly be offset by any claimed savings.
Such a merger, they claim, "won't improve the quality of customer service, could easily increase costs and reduce efficiency, and would increase overall financial risk". The only way to avoid those consequences is for the newly-merged airline to exploit the consumer and/or prevent low-cost carriers from continuing to operate.
The purpose for creating mega-carriers, in other words, is to lessen competition. I will be writing further about this dreadful merger in the weeks to come.
Write and read comments about this post.
Labels: airlines, big business
Fifty years ago, 
Arthur Frommer is generally acknowledged to be the nation's foremost travel authority. He is the founder of the
