Airline Merger Mania: Bigger Not Always Better

These are the times that try fliers' souls!

First, we had to swallow the concept of code-sharing, the game in which you buy a ticket on a specific carrier but have no idea what airline will actually be waiting for you at the gate.

Then, we were subjected to a perplexing, ever-changing kaleidoscope of frequent flier programs cooperating with other frequent flier programs, some of which honor other airline miles part of the time on certain routes on alternate Thursdays (until they change the plan), and some of which might let you use your credit card miles for a one-way ticket to Paris the three days per year the route isn't "embargoed."

And now, U.S. Airways (which isn't really U.S. Airways any longer since America West bought it) wants to buy bankrupt Delta and turn it into … Delta.

Only, you see, it wouldn't really be Delta anymore, because by then it would be a mixture of America West and U.S. Airways combined with Delta's monster airline fleet in Atlanta, all of which might save imperiled Delta from eventual shutdown and liquidation.

Confused? Hang on.

If this proposed Delta buyout actually happens, it will create the world's largest airline. We're talking huge, and anyone who has ever tried to complain to any aspect of big corporate America about anything knows that bigger is not necessarily better.

Even more worrisome is the prospect that a U.S. Airways-Delta marriage will also trigger a new round of major airline mergers with an overall result that will not be good news for passengers.

But what's wrong with a revitalized Delta plucked from penury by the largess of $8 billion (in stock) from U.S. Airways-America West? Wouldn't it mean more planes, more flights, and more happy, friendly people eager to provide superlative service at every gate?

Not if recent history and human nature is our guide.

First, while any change in the workplace will be automatically resisted by those employees who find change threatening by definition, the serious psychological impact of a megamerger on tens of thousands of airline employees -- including pilots -- has historically created decimated attitudes that in turn can breed the "I'm afraid you've got me confused with someone who gives a damn" school of customer service.

In other words, mergers rife with cutbacks, layoffs and consolidations seldom, if ever, improve morale in the short term. And, in the case of Delta, we're talking about the morale of a work force that has already been rocked by bankruptcy, not to mention the previous threat that Delta management might follow United Airlines' lead in dumping their obscenely underfunded pension plans (many believe both underfunding and dumping pension plans should have been made federal criminal offenses decades ago).

Second, even in the best orchestrated mergers, the level of confusion that swirls for years around everything from the airline's Web sites, credit cards and job culture to the relocated reservations centers (sometimes in India), work rules and thousands of potentially conflicting procedures, are enough to force Job into analysis.

If, as passengers, we never felt the fallout of these disruptions, the issue might be a big yawn. But past mergers have given us graphic proof that two major airlines (or more) cannot undergo a shotgun wedding of their operations without at least temporarily disrupting their passenger service. This was the prime reason that in the America West, U.S. Airways merger, the corporate leaders wisely elected to go very slow in combining the two large operations, a move that has minimized the impact on their passengers. Whether they could pull off the same trick in swallowing an airline as big as Delta is another question.

Third, airline mergers begat airline mergers because the nonmerged will scurry around looking for a way to get bigger faster in order to compete. Unfortunately, that means that if Delta falls to U.S. Airways, the courtship of American, United, Northwest and Continental by each other and just about every other airline out there will end up providing better prime time soap opera than "Desperate Housewives."

And the ultimate fallout? We'll end up with fewer airlines overall, and larger operations charging higher prices, because of reduced competition, while providing reduced frequency and service. In other words, just what we need in an industry that has already learned how to squeeze seats together tightly enough to assault your kneecaps as they try to pack every plane with passengers paying too little to cover the costs.

And therein lies an important point: Airline prices are far too low to sustain the industry. Yes, I know. I'm equally guilty of jumping on the best bargains, and even after being a member of the industry for decades I, too, have come to look on an airline seat as having little direct value.

The truth is, it costs money to fly a seat from one place to another, and thanks to deregulation, airline leaders have been allowed to compete with one another in an ever decreasing spiral that long ago pegged the price of an airline seat far below its actual cost. It doesn't take a Harvard MBA to figure out that too many years of selling the product below cost results in the very bankruptcies we've been experiencing, and that, in turn, produces major airlines in bankruptcy court with ridiculously cheap stock prices that make them look like a bargain. So higher prices are a good thing at the same moment they feel like a bad thing. Reduced capacity and competition, however, is not.

What this all means, practically speaking, is that if this or some other megamerger occurs, we who buy airline tickets will have to pay very close attention to the major changes in ticketing, boarding procedures, and especially scheduling. Flights you've been used to for years between Airport A and Airport B may not be there any longer, and favorite departure times may shift or be replaced altogether.

In past mergers (Delta with Western Airlines, Republic with Northwest, American with TWA), the airlines involved have promised that the "new" merged company would leave just as many choices for their passengers in terms of the number of flights between what the industry calls city pairs (Los Angeles to New York, for instance). But those promises, however honest the intent, are seldom realized. Northwest, for example, bought Republic Airlines in the '80s primarily to get its large hub operation in Phoenix, then promptly gutted its investment by abandoning Phoenix so completely that a struggling little startup airline called America West was able to survive and prosper. The war between the pilots of Northwest and Republic -- fanned into a frenzy by a misguided Northwest management using a divide-and-conquer strategy on the unions -- still festers to some degree to this day.

By contrast, Delta's acquisition of Western was handled very professionally, with Western's employees treated with a respect seldom shown the workers at acquired carriers.

Finally, don't worry about your frequent flier programs being gutted in a merger. No sane airline leader would consider such a move. Will they continue making it nearly impossible to redeem those miles? Of course. But dumping the programs, never.

Unfortunately, we don't get to vote on whether Delta falls to U.S. Airways-America West, but if it happens, passengers who pay close attention to the fine print and the changes will fare well.

Those who don't will end up standing all alone at the wrong counter as their flight pushes back somewhere past the security portal.