Wednesday, November 14, 2007

Is a United-Delta merger in the works?

According to the Associated Press, United Airlines and Delta Air Lines are in talks regarding a possible merger. Were it to occur, the merger of these two legacy carriers--respectively the second- and third-largest in the U.S.--would create a company larger and with more routes than American Airlines, which currently holds the #1 spot for total size among U.S. airlines. Rumor also has it that the new company would retain the United brand name.

The possibility of a UAL-Delta merger is bizarre for several reasons, not the least of which is that Delta vehemently fended off an attempted purchase by U.S. Airways earlier this year on the grounds that it was well positioned to succeed as an independent company. Delta was also bankrupt at the time, and has since emerged from bankrupcty with new labor contracts that included dumping its pension obligations on the Government; why were those concessions granted if only to pave the way for a merger?

For travelers, of course, these political questions are less important than some others:
  • Delta is a member of SkyTeam, while United is a member of the Star Alliance; would the new airline retain the Star Alliance membership along with the United name?

  • Would the "new United" set its top-level elite status at the 100,000-mile level currently used for United 1K flyers, or would it adopt 75,000 miles like Delta's Platinum Medallion level?

  • United currently offers regional and systemwide E-upgrades in addition to mileage upgrades; Delta doesn't have these. Would the "new United" continue to offer these non-mileage upgrades to elite members?

Of course, we don't know. And it may never happen anyway; remember, in late 2006, there was talk about a United-Continental merger that never went anywhere. Keep an eye on this, though. There are far too many airlines in the United States for the industry's own good, and if it isn't UAL-Delta, one thing is certain: consolidation is coming.

1 comment:

Mary said...

Here's my question: will consolidation mean an increase in prices? In most other industries, I understand the answer would be "yes". But the airline industry is so whacky, what with the government bailouts of the legacy carriers that have mismanaged themselves into the ground over and over again, etc. I can't tell if less competition would be a good thing or a bad thing, or even if fewer flights would be a good thing or a bad thing. Presumably, it would mean less congestion on the tarmac, but fewer departure choices.

Hmm. I'm not sure how to feel about this, and since I can't affect change either way, I feel its imperative that I form an inflexible opinion as soon as possible.

Help me, ST! You're my only hope.