$31.7 billion revenue, 800+ aircraft, largest airline in the world – all very impressive, but does the American consumer gain anything? Or is he at a loss? Sourya Biswas reports.

If the Delta-Northwest deal does go through, the combined entity may not occupy the top spot on the airline stakes for long. For analysts believe that a successful merger between Delta and Northwest would trigger off consolidation in the airline sector.

At present, the US domestic market is served by six major carriers, which in order of revenue passenger miles (prior to the Delta - Northwest merger) are American Airlines, United Airlines, Delta Air Lines, Continental Airlines, Northwest Airlines and Southwest Airlines. Of these, except Southwest, all the others are full-service carriers. This list may well reduce to three if the much-awaited consolidation starts off with the Delta-Northwest deal.

In fact, Northwest's agreement to enter into the transaction with Delta enables Continental to buy back a "golden share" granted in 2000  that had allowed Northwest to block any merger efforts by Continental, which had then already discussed a possible merger with United Airlines - a possible merger which could create a behemoth bigger than the combined Delta-Northwest carrier.

Do consumers gain anything from the Delta-Northwest merger? As in most matters, there are two sides to the answer. While the airlines' managements have been vociferous in stating the ''benefits'' that customers will get from this deal not all consumer groups are convinced.

The companies had said through a combined statement that customers and communities would benefit from an expanded global route system and a more competitive, financially secure airline, ne of the strongest balance sheets among major US airlines, permitting the combined airline to invest in its fleet and services to enhance the customer experience.

They also said customers and communities would have a direct service between the United States and the world's major business centers.  (See: The Delta - Northwest merger)

These claims are not without reason. Combining Northwest's strong Pacific network with Delta's strong Atlantic routes would mean travellers could cover more of the globe on a single carrier rather than switching to an airline's partners.

Additionally, since both airlines also use versions of a reservation system developed by defunct carrier TWA, integration issues can be kept at a minimum. Also, if the promise of continuing operations in all hubs is kept, customers in smaller cities will gain access to bigger networks.

What the air-traveler may lose out on
Now, for the possible negatives of the merger. Consumer advocates counter that the merger will decrease aviation competition and bring in even worse service and higher prices. The US Congress is already planning hearings on the deal. The chairman of the house transportation and infrastructure committee, Representative James Oberstar of Minnesota, criticised the Delta and Northwest merger when it was first rumored three months ago. He feels that the deal will benefit the shareholders but not the traveling public.

Such views are also shared by some analysts, who doubt that the estimated $1 billion in "annual synergies" (savings from increased efficiencies) promised from the merger can actually materialize, as the two airlines had already shed a lot of redundancy during their two years in bankruptcy.

They feel that the real drivers in this merger are Wall Street analysts and hedge funds that invested heavily in the airlines over the past few year, and are now looking to recoup their losses through temporary spikes in share prices, after having been hammered on the bourses in the recent past.

Another possible downside is the closure of certain hubs after the merger has been approved, a fact increasingly considered likely by some analysts. They feel that the announcement of maintaining continuity of operations at all centres is just a ploy to gain political approval, but something with Delta will be forced to discontinue later to increase efficiencies and cut costs. Northwest's hub in Memphis could be most at risk because it's relatively close to Delta's home base in Atlanta. Delta's hub in Cincinnati might also lose out because it is relatively near Northwest's hub in Detroit.

Increase of ticket prices is a very probable result. Consider the Indian aviation scenario. After Naresh Goyal's Jet Airways acquired Air Sahara, and Vijay Mallya bought a controlling stake in low-cost carrier Air Deccan through his Kingfisher Airlines, ticket prices have risen appreciably. (Also see: Delta-Northwest merger to affect India services of both airlines)

Of course, a big contributing factor has been the rise in fuel prices. But one must remember that even before this recent spike in crude prices, both Goyal and Mallya had criticised the discounted ticketing policy of low-cost carriers that had forced full-service airlines to reduce fares as well.

They had then said that continuation of such a policy could not continue as it was pushing the airlines deeper in the red. Hence, post-mergers, increase in fares was not unexpected. This may very well be replicated in American skies.

Delta and Northwest said they don't plan to cut more US flights beyond what they've done separately. However, this may soon change. An industry dominated by a few massive carriers would give Wall Street what it's wanted for a long time - fewer planes in the sky. That could allow airlines to cast off redundant or unprofitable routes, use less fuel and keep fares high. Lesser planes equal lesser seats equal lesser pressure on airlines to fill them to make flights profitable. Hence, fewer discounted tickets. Also, same number of passengers chasing fewer flights, resulting in more chaos at airports.

In conclusion, the deal can be both useful and harmful for US consumers. But considering the reality of soaring oil prices, the reality of consolidation may not be far behind. Only time, and US regulators, can tell.