BTC Opposes Delta/Northwest Merger and Air ConsolidationMay 14, 2008 By: George Dooley
The proposed merger of Delta Air Lines and Northwest Airlines faced tough opposition from the Business Travel Coalition (BTC) during this week’s Congressional hearings. The BTC announced its belief that the "proposed merger will neither help consumers nor the competitive structure of the airline industry, and there are other options.”
Delta and Northwest are playing the "fuel card" in suggesting that their merger is an inevitable response to high fuel costs, BTC chairman Kevin Mitchell told members of the House Transportation & Infrastructure Committee.
Mitchell questioned if the Delta/Northwest merger math makes any sense and its impact on communities. “Despite the Delta/Northwest spin machine, there are scenarios for airlines other than ill-considered mergers, and some could produce far better results," he said. "It's time for policymakers, regulators and airlines to look for alternatives to avert disaster.”
Mitchell made several proposals for the carriers to improve results including the airlines accelerating their own unilateral reductions of uneconomic capacity and continue to address cost and efficiency issues. Another option is to ride out hikes in oil prices until the major network carriers could come out on the other side of the current U.S. economic slowdown. A robust airline sector recovery is possible, Mitchell says.
Another option cited by Mitchell is liquidation. “If the proponents of 'let the market work its will' truly believe what they say, then let major carriers fail instead of propping them up with government-sanctioned anticompetitive combinations," he said. "Antitrust law is not meant to be sympathetic to industries that cannot solve their own problems.”
More information: www.businesstravelcoalition.com