Wednesday, February 27, 2008

A Delta-Northwest merger? Well... maybe.

Just ten days ago, a merger between Delta Air Lines and Northwest Airlines looked like a foregone conclusion. Key details had been ironed out: the combined company, which would be the world's largest airline, would retain the Delta name and headquarters in Atlanta but would not close any of either airline's hubs, and there would be stock for employees. Senior managers were even looking beyond the announcement to a large marketing campaign designed to help the merger through regulatory hurdles. All that remained was for the pilots' unions of to conclude a deal on how to handle seniority.

Ah, but the devil's in the details, and that deal over seniority--a key issue which determines pilots' pay, flight status, and opportunities for advancement--turned out to be a lot harder to resolve than anyone had anticipated. Today, with Delta's management team basically saying that a merger just won't happen without union support, it's not clear whether a deal between the two airlines will ever get off the ground (so to speak).

Of course, things can still get worked out. Northwest CEO Doug Steenland is a strong proponent of consolidation and has advised the company's employees that the company is considering "strategic alternatives." United Air Lines, meanwhile, is waiting with anticipation as it considers its own bid for Delta if the merger with Northwest falls through.

Tuesday, February 12, 2008

Which airline has the best lounge?

Most people who fly don't belong to an airline lounge at all. Frequent flyers who spend a lot of time in airports take a closer look at these havens from the usual clatter, but that begs the question: which lounge should you join?

First of all, we'll focus on the lounges operated by the six largest airlines:
There are a few others, including Alaska Airlines' Board Room and Aloha Airlines' Ali'i Lounge, but they operate in only a few airports and members typically enjoy access to other lounges through partnerships anyway, so unless you are based in Hawaii or Alaska, you wouldn't get as much value out of joining one directly.

So, first off: all things being equal, join the lounge that is operated by the airline you fly most often. The simple reason is that not every airport has every lounge, and the airports served by your favorite airline are more likely to have that airline's lounge in that terminal or concourse than they are a competitor's lounge.

That being said, all things are not equal: the Presidents Club is better than the others.

Here's why:
  • Complimentary bar service. WorldClubs and Crown Rooms also offer free alcoholic beverages, but the typical cost for these at the Red Carpet Club, U.S. Airways Club, or Admirals Club is $5.00.

  • Complimentary wireless Internet access. You'll get free Wi-Fi at the Admirals Club or WorldClub too, but have to pay for it at the Crown Room, Red Carpet Club, and U.S. Airways Club, where service is typically provided by T-Mobile at a daily rate of $9.95.

  • Complimentary partner lounge access. All three U.S.-based SkyTeam airlines (Delta, Continental, and Northwest) allow the other two's lounge members access to their lounge whether they're flying with them or not. United and U.S. Airways--the two U.S.-based Star Alliance carriers--don't have such a close relationship and allow one another's members access to their lounges only when they have a same-day ticket on one of the other's flights. What sets Continental apart from its two SkyTeam counterparts is that Presidents Club members also get unlimited use of Alaska Airlines' Board Room; WorldClub and Crown Room members only get that access when flying with their own airline or Alaska Airlines.
Now, for those of you who carry the American Express Platinum Card, you're probably aware that this card entitles you to access to the three SkyTeam airlines' lounges as well as American Airlines' Admirals Club. Does that mean buying a membership in the Presidents Club would be a waste?

Maybe. See, you can use the American Express privilege only when flying with the airline operating the lounge. That means that if you fly into Cincinnati on a Continental ticket, you won't be able to use Delta's Crown Room if you only have the American Express card -- but you could if you had a Presidents Club membership.

Keep in mind, of course, that all of this is subject to change. As I wrote yesterday, Delta and Northwest are in merger talks that may yield a combined airline inclined to change a few things. Moreover, any merger between Continental and United would fundamentally change the alliance structure, and then all bets are off.

For 2008, though, my solid recommendation is to go with Continental's Presidents Club. It's just the best value out there right now for frequent flyers.

Monday, February 11, 2008

The Era of Mergers

Although the exact structure of the new company isn't quite clear, most analysts expect Delta to purchase Northwest Airlines, and they said that a deal could be announced within a matter of weeks.

Some might puzzle over the speed, given the glacial pace at which these things tend to move. A few factors make a quick merger easier for Delta and Northwest than might usually be the case:
  • There's relatively little opposition from unions. Both the Northwest pilots' union and the flight attendants' union have signaled that they would accept a merger if employees were given a stake in the combined company.

  • Air France-KLM, which has a history of close operations with Northwest, has indicated a willingness to contribute cash to help bolster the deal, also in exchange for a stake in the new company.
Of course, for frequent flyers like me, the concept of a Delta-Northwest merger is interesting but of no importance unto itself because both airlines are already allies in SkyTeam. Memberships in either airline's lounge already grant access to the other's, and the mileage systems for both carriers are basically identical.

More significant is the news that United and Continental are themselves in the "very initial stages" of merger talks: while Continental is a SkyTeam airline, United is a member of the Star Alliance, and any union between those two airlines would inevitably change the alliance structure that many of us have come to intimately understand and accept as a foundation of our travel plans.

Of course, there's a lot of potential gain in a Continental-United merger -- if it's done right. Continental has the highest customer service rating among the legacy carriers. It's the only one to still serve meals in coach class. And its overseas BusinessFirst service? Phenomenal. Extend those benefits across both route networks and it's a win-win.

My concern is that it won't go the right way. And since between the two of them, Continental and United account for almost all of my flying (about 175,000 miles per year), I have a lot to lose if the merger brings out the worst of both carriers. We all do.

Let's hope that doesn't happen. First, we'll have to wait and see what happens with Delta and Northwest.*

* A Delta-Northwest merger would have to come before a Continental-United merger could proceed -- first, because Continental doesn't actually want to merge with anyone, but more importantly because Northwest owns a "golden share" in Continental that allows the airline to block any change in ownership. If NWA itself is acquired, though, Continental can buy the golden share for $100.