Delta Air Lines would face an unprecedented airline antitrust review if it
decides to propose a merger with either Northwest Airlines or United Airlines
parent UAL.
 Industry consultants, lawyers, and former government
officials agree either merger would present the US Justice Department with its
toughest airline test. And with a crucial election year underway, Congress
would certainly weigh in.
A Delta merger review would include serious scrutiny of large international
route networks. It would also test a popular assumption that the merger
parties would get more favorable treatment from the Bush administration
compared with a possible Democratic one in 2009. Antitrust lawyers said
none of the leading presidential candidates was considered an antitrust
maverick, although Democrats have had a reputation for being more aggressive
than Republicans in challenging mergers. Delta management wants to begin
formal merger talks with Northwest and United, the Wall Street Journal
reported last week. The airlines have not commented.
For sheer size and reach, No. 3 Delta hooking up with either No. 2 United
or No. 5 Northwest is only comparable to an earlier bid by United to swallow
US Airways. That attempt collapsed in 2001 after a lengthy antitrust review,
completed by the Bush Justice Department, raised serious competition concerns.
All experts agreed Congress would seek to have influence. Lawmakers, worrying
about the impact on airline service to their districts, jobs, and ticket
prices, could not halt a merger outright. However, they could pressure the
White House and antitrust enforcers. Delta appealed to lawmakers in its
successful effort to turn back a hostile merger bid from US Airways last year.
The most comparable period for consolidation, experts say, was the mid
1980s when a flurry of merger activity involving healthy or relatively healthy
companies. A merger between Delta and Northwest, or with United, would
be unprecedented, because of their size and the fact that all three carriers
are financially stable. The Bush administration has approved two big
airline mergers: American Airlines' acquisition of TWA in 2001 and the merger
of US Airways and America West in 2005. Both involved financially distressed
companies, US Airways and TWA, a situation that generally gets a more
sympathetic government review.
The paramount concern for the government would be the market share of a
United-Delta or Northwest-Delta combination. Delta and United together
comprise nearly a quarter of domestic service based on passenger traffic.
Delta and Northwest account for about 18 percent, the latest Transportation
Department figures show. Dominance on specific routes and at key
airports would also be carefully scrutinized. Delta commands 53 percent of
business at its Atlanta hub and a third of flights at Salt Lake City and
Cincinnati. United's share at Chicago's O'Hare Airport is 40 percent; 42
percent at Denver and San Francisco, and 21 percent at Washington Dulles.
Northwest has 66 percent of the business at Minneapolis, 60 percent at
Detroit, and half of all flights at Memphis. Antitrust officials
characteristically would seek divestment at certain airports, depending on the
merger combination, and target overlapping routes.
It is unclear, however, how the Justice Department would view the potential
combination of international routes as well as the carriers' deep alliances
with foreign carriers. Both Delta and Northwest have close ties to Air France-KLM,
while Delta and United are members of competing global alliances.
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