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Airline Mergers Questioned

March 6, 2008 By: Travel Agent Central Contributor Travel Agent

Travel agents looking for critical insight into proposed airline consolidation can check out veteran airline analyst Hubert Huran's commentary on mergers posted online by the Business Travel Coalition (BTC) on its website (

Huran blasts airline mergers with a list of "Ten False Claims About the Need for U.S. Airline Mergers" and charges that the mergers would "protect and entrench weak airlines such as United and Delta that haven't generated returns for shareholders for over a decade."

He contests claims that there is a groundswell of support for airline mergers and argues that demand for mergers is being fostered by hedge fund managers, a few senior airline executives, along with Wall Street firms, layers and consultants "lusting after big fees."

Huran also questions the costs of implementing airline mergers ($5 billion or more) and casts doubts on if the net result will be greater competitiveness, efficiency or customer service quality.

He doubts if there is a growing groundswell of support for mergers, the assumption that mergers are a logical reaction to higher fuel costs, questions if mergers are a "natural industry shakeout" or if they increase corporate value without harming consumers.

"The merger advocates are looking for speculative profits and trading fees that contribute nothing to the financial strength of the airlines," Huran argues. The BTC site offers a diversity of opinion on the issues. Currently Delta, United, Northwest, US Airways, America West and Continental have been named as possible merger targets. (GD)

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