Regardless how fast Delta, United, Northwest and American resolve employee contracts many of them now in bitter negotiations or legal battles the hefty settlements will be a drag against profits in the coming year, already weighed down by rising fuel costs. United, which is still struggling to get back lost passengers, hopes the contract payoffs serve as down payments on a big merger reward. The combined airline would control more than 27 percent of U.S. passenger traffic and serve eight large domestic hubs and 170 cities worldwide. For consumers, a merger would mean the possibility of easier connections, more combined frequent-flier miles for more destinations, and the benefits of what United says would be a more efficient network. They also face the likelihood of greater ticket costs, since fares at airports dominated by one carrier have been shown to be significantly higher.
Critics warn that reduced competition is bound to hurt passengers, too.
United has promised a two-year domestic fare freeze, and contends that passengers flying one airline typically pay lower fares than those splitting their ticket across two airlines. But it also initiated a steep fare hike adopted industrywide in October, evidently with the impending freeze in mind. Besides likely adhering to United's pledged freeze, other airlines are certain to propose a spate of mergers and acquisitions of their own if Justice Department regulators allow United to get even bigger. Many airline executives and observers suspect it will in some form. But the two airlines may well be required to divest critical routes and assets.