Passengers file lawsuit against merger of Northwest Airlines and Delta Air Lines

In a rare incident of its kind, a group of airline passengers have moved court seeking to block the proposed merger between Northwest Airlines Corporation and Delta Air Lines Incorporated. The group of 28 airline passengers filed the federal lawsuit in San Francisco, the United States, arguing that the proposed merger between Northwest Airlines and Delta Air Lines would result in “higher ticket prices, diminished service and illegal monopoly.” The lawsuit added: “The potential for increased price-fixing, division of markets and other anticompetitive acts among the remaining airlines is significant.”

“The merger,” the lawsuit further alleged, “would also increase the combined market share of the remaining largest four airlines to about 60% or 70%, meaning that nearly all domestic air travel in the country would be operated by 5 airlines.”

Northwest Airlines and Delta Air Lines had announced on April 14, 2008, that their combined “enterprise value” would be $17.7 billion, including market values and  debts of both companies.

The combined company, to be named Delta, would have the most flights worldwide, with 390 destinations in 67 countries.

Northwest Airlines, the principal subsidiary of Northwest Airlines Corporation, is a major carrier of the United States, headquartered in Eagan, Minnesota. It has three major hubs in the United States – Detroit Metropolitan Wayne County Airport, Minneapolis-Saint Paul International Airport, and Memphis International Airport. It also operates flights from a small hub in Asia at Narita International Airport, near Tokyo, and also operates trans-Atlantic flights in cooperation with partner KLM from Schiphol Airport in Amsterdam.

Delta Air Lines, headquartered in Atlanta, Georgia, the United States, operates an extensive network of domestic and international services covering North America, South America, Europe, Asia, Africa, the Middle East and the Caribbean.

Delta Air Lines operates a hub from the Cincinnati/Northern Kentucky International Airport.

According to media reports, the suit filed by the airline passengers alleged that the proposed merger between Northwest Airlines and Delta Air Lines would “result in higher ticket prices and diminished service and that the new company would control 24% of domestic flights, thus reducing competition.”

Delta Air Lines reacted to the lawsuit by describing it as “frivolous.”

In a statement, Delta Air Lines said: “The Northwest-Delta merger is pro-competitive and pro-consumer because our networks have little overlap. The end-to-end combination of these two carriers enhances, not diminishes, consumer preference and choice. The Department of Justice is reviewing our case and we are highly confident this deal will be approved by the end of 2008.”

A spokesman of Northwest Airlines was quoted as commenting on the proposed merger: “This actually promotes consumer choice, it doesn’t diminish it.”

US media reports say that some lawmakers fear that the planned merger would lead to reduction in jobs and higher ticket prices.