Airlines’ merger would add to tourism concerns
Delta and Northwest airlines have agreed to a merger, while United and Continental
are discussing doing the same.
Still traumatized by the collapse of Aloha and ATA airlines, Hawaii's tourism industry is anything but relieved by the agreement of Delta Air Lines and Northwest Airlines to merge. Flights to Hawaii from the mainland might be reduced where the two majors' routes overlap, while service is likely to suffer and prices increase. A worse alternative, of course, would be their return to bankruptcy.
Approval of the merger by the Justice Department after an antitrust review is expected to lead to a combining of United Airlines and Continental Airlines before departure of the Bush administration. Others might be ready at the tarmac.
The routes of Delta and Northwest are complementary, which could mean that few flights would be erased because of redundancy. The two airlines already have been code-share partners. Together, they would be the world's largest carrier.
The merger is not likely to result in greater efficiency. Both Delta and Northwest streamlined their operations when they came out of bankruptcy last year. If past mergers are an indication, passengers can expect fewer seats and worse service while air fares increase because of higher fuel costs.
"There's no doubt in my mind fares are going to go up," said Rick Seaney, chief executive of FareCompare.com, which tracks airline ticket price changes. "Consumers are deluding themselves if they think that's not the case.
The danger, of course, is that Hawaiian vacations will become unaffordable to Americans of modest means. In a Wall Street Journal op-ed piece, the two airlines' chief executives maintained that price increases will not be caused by the merger.
"In this industry, prices are set by market forces and competition," asserted Delta's Richard Anderson and Northwest's Doug Steenland. "There is very little overlap between our route networks and the merged airline will face intense competition throughout its system."
Both airlines fly to Hawaii from Los Angeles and San Francisco, and state transportation spokesman Scott Ishikawa said the state is concerned "that they would reduce flights coming out of the same city." In a new Web site, the two airlines said the combined carrier will make seven nonstop connections with the mainland and two with Japan and will begin nonstop service next year from Los Angeles to Kona and Lihue.
The movement also might be an invitation to other airlines to increase flights to Hawaii or to enter the fray. British billionaire Richard Branson is considering plans for his discount carrier Virgin Airlines to begin direct flights between London and Honolulu in 2011, and Virgin American this week secured $100 million from investors to expand service.