Goodbye Northwest: And then there were five

— -- My most recent flight on Northwest Airlines will likely be my last. Now that shareholders have approved the proposed merger between Delta and Northwest, it appears the smaller Minnesota-based airline will soon be absorbed into the Delta network and the Northwest name will disappear from the skies.

While some customers benefit from expanded route networks, most airline mergers result in higher fares, fewer flight options and a period of dysfunction and chaos for travelers as two airlines attempt to combine. As airline mergers go, Delta and Northwest may be less likely to reduce competition because the two airlines have few overlapping routes. There should also be less chaos because these airlines share some of the same computer systems, belong to the same alliance (SkyTeam), and Delta CEO Richard Anderson previously served in the same post for Northwest. In spite of these possible synergies, the new airline and its customers are likely in for a turbulent ride aggravated by volatile fuel prices and a skittish economy.

Bigger is not necessarily better

Airlines often believe "bigger is better" and that one large airline will be more profitable than two smaller airlines. But if the old adage is true, the big six network airlines should be highly profitable, since most are products of previous airline mergers that held great promise at one time. Unfortunately, merger-driven economies of scale never seem to materialize, as the bulk of airline costs are lodged in labor, fuel and expensive assets like aircraft, which offer little gain from economies of scale.

Anderson is quick to point out that the combined airline will be the largest in the world and will operate a global route network. This might be attractive for customers in Delta-Northwest hub cities, like Atlanta or Minneapolis-St. Paul, but it won't sway corporate customers in Chicago, Houston and most other U.S. cities where other airlines dominate. While Delta's strengths in Europe, Latin America and the East Coast complement Northwest's Pacific routes and coverage in the north central U.S., any incremental new business is unlikely to reverse the fortunes of two airlines that lost a combined $1.4 billion in the second quarter of this year.