The Delta + Northwest Airline Merger

The proposed merger of Delta and Northwest, which would result in the largest airline the world, is not a surprise to industry observers. Analysts have recognized for years that consolidation is most likely the only way for the major carriers to survive. Rising fuel costs along with a slowing economy and intense competition make this a difficult time to be an airline. By consolidating their networks, airlines can affect the only one of these factors within their control, which is the competition component.

However, federal regulators have prevented such mergers before, and there is no guarantee that this one will go through. Congress often argues against such mergers in order to protect the traveling public from higher fares, though this is probably less a concern to them than likely strife from the necessary consolidated labor agreements. The reality of airline competition is that despite the fact that airlines rarely make money, there is almost always another startup waiting to come in and lower fares. As long as the FAA protects the new entrants from being squashed by the larger carriers through predatory pricing (intentionally losing money with drastically low fares and high frequency in order to put a weaker competitor out of business), competition goes on.

Therefore, it is almost certainly in the interest of the public for this merger, and the subsequent ones that will no doubt follow, to go through as long as the FAA does not simply leave it there. Consolidation does not necessarily mean decreased competition, and so long as a proper balance between economically sensible consolidation and energetic competition is maintained, both consumers and airlines will benefit. In the face of this proposed merger, and the others that may follow, government scrutiny and regulation of the industry might increase to ensure that proper balance is maintained.

-Joshua Schank