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NWA, DAL


Airline mergers are for suckers

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bloggingstocks.com  Jan 17, 2008

The theory at places like Delta is that airline mergers build stronger companies more likely to weather economic downturns. That does not take into account that a combination with a company like Northwest may actually allow for few costs. Also, poor customer service, which is often part of mergers, could drive away customers.

According to The New York Times, "Close scrutiny of the business rationale for airline mergers suggests that any improved profits from consolidation will likely be short-lived, at best."

Common sense would support that point of view. Putting together two airlines saves no money in the fuel department. The number of in-flight people is not likely to change much. Aircraft maintenance costs stay about the same. There may be some savings in ground personnel. The disruptions in customer service which usually come with an airline combination are likely to drive some people to competing carriers.

If a recession comes, an airline merger might save some money short-term, but it will not offset sharply high jet fuel prices and falling numbers of travelers.

Airline mergers are for suckers
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