Merging, Going Nowhere

A lot of us are pondering what the merger of Northwest Airlines and Delta Air Lines means for the Twin Cities. A lot of ink is being spilled, a lot of pundits and academics are pontificating—trust me, a lot of it is garbage. The end result will be somewhere in between the rosy forecasts of life under the benevolent hand of the world’s largest airline and the predictions of a return to flyover territory status. But will it matter?

Not if oil prices keep rising, it won’t.

If oil prices keep heading up (jet fuel costs have nearly doubled since 2006), major changes are on the horizon for America’s mobility. Example: Last summer I traveled to Washington, DC, with my son. We paid approximately $280 each for our tickets on Northwest, a fairly typical tariff to a major East Coast city.

We’re going again this summer (important meetings with Bill Clinton, doncha know). Ninety days out, the lowest fare is more than $400, and it ain’t because the flights are oversold or Sun Country has pulled out. It’s because of the cost of fuel. We can rant all we want about the state of flying, but you can no longer accuse the airlines of overcharging. Even Sun Country is charging four bills to DC. It’s oil.

The airlines have cut to the bone: Regional jet pilots are paid less than a Subway manager, new American Airlines flight attendants complain they qualify for food stamps, planes operate with the minimum legal crew, and the fleets are geriatric relative to the European and Asian carriers. It has become a frugal business. So fares must go up. And oil hit another record yesterday.

Problem is, many of us may have to fly half as much if airfares are twice as high. Especially us leisure travelers, who have become accustomed to flying to Fort Myers to watch a spring training game, to Chicago to view a museum exhibition, or LA to try a hot new restaurant. On-task America lives in the world of the short break. The two-week vacation is now four three-day weekends fueled by cheap airfares. We may be returning to the world of 1968—when flying was for the affluent, a honeymoon, or grandma’s funeral.

America fiddled through two decades of artificially cheap oil and didn’t use the time to prepare for the inevitable. And there is no alternative. There is no credible effort on the verge of a great advance in alternative jet fuels, despite Richard Branson’s puffery. We have no TGV to carry us to Chicago in three hours as they do in Europe. Just overcrowded Interstates that can barely take another driver (driven I-95 in Florida lately?)

For the travel industry, this could be devastating. Consider isolated Hawaii, having lost thousands of seats a day of West Coast visitors after Aloha’s bankruptcy. Hawaii is not a profitable market for most airlines. Aloha used those routes to feed its dense inter-island network of flights. United or Delta have no such motivation and have not rushed in to fill the void. Thousands of fewer seats mean thousands of fewer tourists. Good luck, Waikiki.

And for those of us who feel most alive when we are discovering a new place, a new culture, seeing something fresh and exciting, reveling in the amazing things cheap mobility has brought us, the words There’s Always Brainerd are little consolation.

Comments

[Robb]

Well, might I suggest there are much larger implications for Minnesota with a NWA/Delta merger than just a low price faire to D.C.? Perhaps it would be well advised to open the aperture a little larger than just our summer vacation plans?

I hope Oberstar, Klobachar, Coleman, and Pawlenty can get beyond the canned meat marketing of this proposed merger and they do it quick. Perhaps with Honeywell gone to New Jersey; Dayton Hudson - Marshall Fields - Macy's gone; maybe next 3M will be acquired by Dupont and the University of Minnesota will just become an extension campus for the UCLA. Then Target can merge with WalMart and we'll have a wrap.

Letting mergers and acquisitions and market consolidation happen willie-nillie is not a pro-business platform. Large-scale consolidation of capitol holdings can have wide-spread negative implications for many businesses, communities, employees, and the tax base.

If nothing else it is a good discussion for Minnesotan's to have about its future.

[bertram jr]

When the Vikings leave, that's when people will look around and see we're really just an old mill town.

[Robb]

I'm trying to resist but I can't...

If the Vikings leave the only thing people might notice is the crime rate going down.

[Joseph Ryan]

I thought your readers might be interested in our new free guide
to researching cheap airfares online at http://www.websearchguides.com/cheap_airfares.htm

Thank you.

Joseph Ryan
Washington Research Associates Inc