If NWA merges, what can travellers expect?by Martin Moylan, Minnesota Public Radio
The board of Delta Air Lines today is expected to decide whether the company should pursue merger talks with both Northwest and United Airlines. And Wall Street analysts are suggesting Eagan-based Northwest Airlines is the more likely partner for Delta. Here's what a Northwest merger could mean for local air travelers.
St. Paul, Minn. — If Northwest merges with Delta or another major airline, travelers would likely be most concerned about flight reductions here in the Twin Cities.
People love to gripe about Northwest's fares being too high. But no one seems to have a problem with all the flights Northwest and its regional carriers offer out of the Twin Cities. On weekdays, they provide nearly 500 flights to 161 destinations. Non-stop.
If Northwest and a merger partner were to dramatically cut flights here, it's highly unlikely other airlines would replace all the flights that get dropped.
But maybe there's not much reason to worry about Northwest whacking flights if it merges with another carrier.
When Northwest emerged from bankruptcy last May, airline CEO Doug Steenland affirmed the carrier's commitment to keep its corporate headquarters -- and a major hub -- in the Twin Cities.
"We're committed. We sort of re-said our vows at the time of the renegotiation of the Minneapolis lease," said Steenland.
That lease and other agreements with the Metropolitan Airports Commission require Northwest to keep its headquarters and a hub in the Twin Cities. Airport commission spokesman Patrick Hogan says nothing is guaranteed. But he's confident a Northwest merger won't mean service cuts for Twin Cities travelers.
"The airline has stated and restated its commitment to its hub and headquarters here in Minnesota. Obviously, whenever you have mergers or acquisitions, there are so many different variables, it certainly is enough to make anybody nervous. But we do think we are in pretty good shape in terms of having some leverage to encourage them to keep that hub and headquarters here."
That leverage includes Northwest's obligation to lease about 100 airport gates through 2020. The airport commission says Northwest can't avoid paying for those gates. And then there's $260 million Northwest owes the commission. If Northwest tries to wiggle out of its commitments, the commission could seek immediate repayment of the loan. Minneapolis-based travel expert Terry Trippler says it's possible a merger could lead to fewer international flights out of the Twin Cites. But Trippler doesn't see Northwest and a merger partner cutting domestic flights, given the location and profitability of the Twin Cities airport.
"I can't see the domestic routes being reduced. If you reduce the Minneapolis-St. Paul hub, who is going to fly from Pierre to Chicago? Or Watertown to Chicago? Or Rapid City to Chicago, for that matter. This hub has to remain here. And this has consistently been Northwest's most profitable hub," says Trippler.
But flight options aren't the only thing travelers need to think about when it comes to a merger. Airline combinations are typically very messy affairs, as companies try to combine work forces and integrate their operations. Trippler says a merger could lead to one snafu after another.
"If you remember the Republic-Northwest merger, I mean there are some bags today that I know still haven't been delivered," says Trippler.
Northwest merged with Republic Airlines in 1986. And the following year was a nightmare for the airline, its customers and employees. Labor unrest contributed to chronic flight delays and baggage problems. Delays in combining the two workforces meant former some former Republic employees were paid as much as $6 an hour less than Northwest workers with similar jobs and experience. That made for much unhappiness among workers. And travelers felt it.
Delta poses special problems for any merger partner. Trippler notes that only Delta's pilots are unionized. He says mixing Delta's remaining non-union employees with another carrier's unionized workforce could lead to lots of trouble.
"This would be very, very interesting to see. A Delta merger with anybody for that matter. Because they are a non- union airline. It could be tough on customer service."
Northwest wouldn't comment about how a merger would or would not affect its commitment to the Twin Cities. The airline says it won't comment on any merger speculation.
- Morning Edition, 01/11/2008, 7:20 a.m.