A year later Anderson weighs in on consolidation

anderson_richard.jpgDuring Delta’s recent investor day carrier CEO Richard Anderson had some interesting things to say about the climate for consolidation in the US.

The comments are timely given Delta closed on its merger deal with Northwest about 13 months ago, and anticipates receiving a single operating certificate by year-end.

Responding to a question about consolidation in the airline industry Anderson says:

“Internationally..it is very pro consolidation. We’ve seen that in the EU. We’ve seen it in Asia. In the US I would say the change of administration is decidedly more regulatory focused and we’ve seen that across the board. While we haven’t had a merger transaction obviously presented to the Department of Justice, I would be a bit concerned that this administration would be more activist with respect to anti-trust laws.”

Anderson says if a merger transaction did in fact occur, economics should prevail. He also believes how competition is examined in the US industry could also use an overhaul.

“Our competition policy in the US is a bit outdated, because our competition policy tends to focus on city pairs and not effective networks.”

He further states that there was a lot of discussion about the Delta-Northwest merger, and if it would trigger anti-competitive effects –

“….none of which was true…so we are actually in the process of getting some papers published from our economists….on the contestability of markets to get people to better understand the network effects in this business and the ease of entry and the ease of exit..”

Here’s some testimony from Anderson when he was making the case for the merger to US legislators that touches on some of the competitive aspects raised by combining the two carriers.


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