Friendly skies? Ha! Bumpy ride ahead

Bill Catlette, a human resources management expert, says the Delta-Northwest merger is likely to fail because “these are two large organizations with radically different cultures, sets of norms, and value systems. Whereas Northwest’s management and its heavily unionized work force have been at war for years, Delta enjoys relative peace with its employees.”

(Maybe not for long. Delta’s flight attendants, who rejected a union in 2002, began a new vote this week on whether to unionize.)

While the new entity may “enjoy some lucrative new routes, be able to sell off some of the uncommon equipment models, and wring a little more fat out of the system,” Catlette explains, “hell will freeze over before these two families fall in love, work harmoniously and produce a consistent customer experience.”

Other merger rumors also don't look promising when it comes to customer service and work force issues.

The most likely next partnership is United and Continental, according to Alan Bender, a professor of airline economics at Embry-Riddle Aeronautical University in Daytona Beach, Fla., but he believes any number of legacy airline combination is likely.

“I think mergers are not to be unexpected,” he says. In particular, he says, airlines are trying to find ways to compete with Southwest Airlines, which has become a domestic "colossus."

So the airline industry will go the way of retail in the United States, Bender surmises. “It’s like Wal-Mart and Macy’s,” he says. “How many retail department stores do you need?”

But Thomas Kochan, professor at MIT Sloan School of Management, warns that the urge to merge by major airlines could a “perfect storm” of work force and customer service problems unless the airlines involved plan carefully.

For investors, he adds, the Delta deal looks good on paper, but in the long term “you can’t build a successful airline unless you have support from the work force.”

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Ilker Baybars, professor of operations management and manufacturing deputy dean of the Tepper School of Business at Carnegie Mellon, is a bit more optimistic.

“I think it’s going to be good for the industry,” he says. “Consolidation is inevitable with escalating fuel prices. It’s more economical.”

As for economy-class fliers, he admits they will continue to be viewed as “cattle.”

That approach may create more opportunities for upstart airlines, says Harlan Platt, a finance professor at Northeastern University's business school. He expects the merged legacy carriers to dispose of unprofitable routes.

“The merger activity will induce entry by carriers, similar to Virgin America and JetBlue, to provide a lower-cost alternative and force the legacy carriers to compete,” he says.

But, he adds, “It will be a painful journey to get there because it’s going to become far more difficult to fly.”

We’ve come a long way since Congress deregulated the airline industry in the late 1970s with the hope of putting air travel within the reach of all Americans.

It remains to be seen whether the coming consolidation will fulfill one of the stated missions of the law deregulating the industry: “the avoidance of unreasonable industry concentration which would tend to allow one or more air carriers to unreasonably increase prices, reduce services or exclude competition.”

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