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Editorial: Hope and apprehension for consumers

Can promised stability vindicate airline merger plan?

Last update: April 17, 2008 - 10:42 PM

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SEEKING STABILITY

''This is all about taking, historically, a really very fragile business that has extraordinarily important responsibilities and to try to put it in a position where it's a stronger brand on safer footing.''

Northwest Airlines CEO Doug Steenland

INTERVIEW ONLINE

To hear excerpts from the Star Tribune's interview, go to startribune.com/audio.

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Imagine the peace it would bring to airline passengers to heed the words of the Dalai Lama the next time things go bad at the airport: "If there is no solution, why worry? If there is a solution, why worry?''

These are tense times for the flying public. Fares are up, with no end in sight; service is inconsistent, and the summer travel season could be brutal once again. With that backdrop, Northwest Airlines CEO Doug Steenland and his partner in mergers, Delta Air Lines CEO Richard Anderson, must now try to sell a complex combination of the two carriers to a skeptical Congress as well as to a demanding Wall Street, to state officials in Minnesota and to federal regulators. Not to mention their employees and customers.

For Steenland and Anderson, the path the Dalai Lama described in Rochester earlier this week is not an option. They very much need solutions that will win support for their bold move to create the world's largest airline.

The two CEOs were in full sales mode Thursday in a visit with the Star Tribune Editorial Board. Their partnership is intriguing. Steenland, who led Northwest through bankruptcy reorganization, is a lawyer with laser-like analytical skills. Anderson, who would run the merged carrier, is a charismatic executive who many industry experts say is the key to a successful merger.

The CEOs said they would honor the "spirit'' of their agreements with the state of Minnesota, which is another way of saying negotiations are continuing. They also described their plans to maintain significant operations in Minnesota, with more details to come.

For consumers, the biggest benefit from a merger of the two companies would be stability, the two emphasized. Operating separately, the airlines would continue to be fragile enterprises more vulnerable to the rise-and-fall cycles that have plagued the industry. Together, they can build a global network that provides one-stop service for business and leisure travelers.

Just don't expect to pay less for your tickets. With fuel prices rising, the CEOs were not ready to promise a new era of lower fares. The honesty is appreciated, even if the truth hurts.

Industry observers say higher fares are a certainty as consolidation continues. Kevin Mitchell, chairman of the Business Travel Coalition, said fewer major airlines means less bargaining power for corporate buyers. Likewise, individual consumers will have to dig deeper to travel as larger carriers continue to cut capacity to reduce costs, especially if fuel prices keep climbing, said Tom Parsons, chief executive of Bestfares.com.

One potential bright spot is that legacy airline consolidation might create more opportunities for low-cost carriers such as Southwest Airlines to enter markets like Minneapolis-St. Paul, said Terry Trippler, founder of the travel site tripplertravel.com.

Trippler speculated that Metropolitan Airports Commission officials are working overtime to recruit new carriers to the market in the wake of the Delta-Northwest announcement. Let's hope so. Healthy competition at our international airport is the key to reasonable fares and improved service.

Meanwhile, try not to worry.

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