Providing Unique Commentary and Insight into Politics, History and Society since 2005

Tuesday, April 15, 2008

Northwest-Delta Merger a Mixed Bag

Delta and Northwest have agreed to merge with much fanfare. The combined airline which will be called Delta will be the world's largest. The merger should work because the route systems of the two airlines are probably the most unique and distinct of any major US carriers. However, some pitfalls do exist.

  • Northwest is the one US carrier with a "brand name" abroad in the post TWA/Pan Am world. This brand name applies only to Japan, but Northwest has had since 1946 "fifth freedom" rights to pick up passengers and cargo in Japanese cities and fly them to Asia without touching American soil. Delta has a very bad reputation in the Asian market and re-branding Northwest as Delta may not go over real well in Japan. The strength of Northwest in Japan and East Asia is from my vantage point the only thing that really made Northwest an attractive merger partner for any airline.
  • The combined airline is still pathetically weak in the Southwest and Texas. Delta closed its Dallas/Fort Worth hub several years ago and Northwest has virtually no presence in the region either.
  • I find it particularly laughable that the combined airlines says they will not close any hubs. How can an airline justify a hub in a second tier market like Cincinnati when Detroit is so close by and is clearly a much more desirable place to have a large operation.
  • What will the EU think of Air France whose partner Delta bought Northwest right after Air France bought KLM, who has a long standing alliance with Northwest. Will the EU feel this will border on a transatlantic monopoly? KLM/Northwest had the authority granted by the EU to co-market transatlantic ops long before Delta and Air France did, but I am thinking British Airways, American Airlines, Lufthansa and United may find this combined carrier (essentially a four way merger for trans atlantic operations purposes) to have too much bite particularly at large airports like Paris (CDG), Amsterdam, and New York (JFK).
  • What about fleet commonality? Delta flies all Boeing and McDonald Douglas (MD 80s and MD 90s) aircraft. Northwest flies a large number of Airbus aircraft and still has age old DC-9s based in Detroit and Minneapolis. In addition, Northwest has a number of 747-400s which in this era of increased fuel costs is not the type of plane you want to depend on. However, the combined airline has no other plan that can carry the cargo capacity or the number of passengers the 747-400 can.
This combined airline should be strong but merging corporate cultures and dealing with the problems noted above need to be taken into consideration.

1 comment:

Anonymous said...

Where have you disappeared to ??? a month ago we were to have lunch, what happened ??? Do need to speak to you. Could you contact me ? I need some information I can only get from you. Please call. Thanks... Ken..

Canes Rising Headlines

The Kartik Report

CSRN's American Soccer Spot

Blog Archive

About Me

I am the host of the Major League Soccer Talk and EPL Talk Podcasts and am frequent guest on other (world) football shows. I am also the publisher of various other websites including this one. I work in public/government relations in addition to my soccer work and have a keen interest in history, politics, aviation, travel,and the world around us.