Delta Air Lines and United Airlines have scaled back plans for a virtual merger after the withdrawal of support from Delta's pilots. The failure of this, the largest of the proposed US domestic mergers, raises doubts over the extent to which the other US carriers will pursue alliance plans.
Delta and United have proceeded with a reciprocal frequent flier plan, but the only remaining option for further cooperation now seems to be a joint marketing effort - a far cry from the alliance the two airlines originally envisioned.
Delta's labour contract with its 9,000 pilots requires their approval of any proposed code-sharing. The union representing Delta's pilots says it was willing to consider approving the proposed United code-share if directors would convert a pilots' position on Delta's board to a full voting seat. In mid-August, Delta's board rejected this request, explaining that "-an independent board best serves Delta and its constituents". Leo Mullin, Delta president and chief executive, says the decision is "not at all a reflection on the pilots, but a decision in favour of good corporate governance". But his decision not to be held to ransom over a board seat has dealt him yet another hard lesson in the power that US pilots wield over their carriers, and has most likely cost him the alliance.
The Delta-United alliance is now relegated to the same status as the pact between American Airlines and US Airways, which is mainly a reciprocal frequent flier plan. The other major US link, between Northwest and Continental, requires US Department of Justice anti-trust clearance as an equity stake is involved.
Source: Airline Business