US Transportation Secretary Norman Mineta has reportedly suggested that a merger between US airlines Northwest Airlines

US Transportation Secretary Norman Mineta has reportedly suggested that a merger between US airlines Northwest Airlines and Delta Air Lines could result from the latest round of industry restructuring.

Published: 11 Jan 2006

US Transportation Secretary Norman Mineta has reportedly suggested that a merger between US airlines Northwest Airlines and Delta Air Lines could result from the latest round of industry restructuring.

The development comes at a stage when the US full service airline industry has been battered by rising fuel costs, weak revenue and low-fare competition, leading some carriers, including Delta and Northwest, into bankruptcy.

“I sometimes wonder whether or not... Delta and Northwest will come out as a merged carrier,” Mineta reportedly said in Shanghai, adding he was “just thinking out loud”.

Mineta, according to Reuters, said he expected United Airlines and Aloha Airlines to emerge from bankruptcy protection in February. “We’re going to have to see consolidation, but right now we do have too many seats following too few passengers.”

According to Reuters, higher costs and lower plane utilisation would continue to hobble airlines running ‘hub-and-spoke’ operations, Mineta said. He noted that lower cost carriers like Southwest Airlines and Jet Blue had utilization rates of 78-82 percent, versus 45-48 percent for the hub-and-spoke carriers.

“Until the remaining legacy carriers do something about extracting themselves from a hub-and-spoke operation, I'm not sure they are going to be very successful,” he said.

But airline experts and insiders alike disagree strongly.

“Two airlines in bankruptcy do not make one profitable airline outside of bankruptcy,” Mike Miller, a partner with The Velocity Group, a Washington-based aviation consulting firm, said according to enquirer.com. “If you are in bankruptcy, the last thing you want is a massive and expensive merger ... it would add as much stress as having to move your house at the same time you're getting married.”

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