Research Fellow John C. Fortier

The proposed Delta-Northwest merger comes in the midst of a turbulent political atmosphere. The end of an administration, a presidential campaign that has focused on support for unions and concerns about trade and globalization, and worries about rising fuel costs all complicate the timing of the merger. But if history is any guide, the process of approving such a deal will be less about politics than about law and less predictable in its timing and outcome than the voices on Capitol Hill would have you believe.

The end of an administration has its rhythms. Legislation and judicial confirmations slow to a crawl. Political appointees look for new jobs. There is talk of last-minute executive orders or regulatory changes.

Most of all, Congress, the bureaucracy and other political players in Washington know that they will remain after the administration and its policies leave town. What this all means is that there is great pressure to either speed up or slow down. Speed is urged by those who see the administration as friendly.

Make decisions now, they urge, rather than under less certain conditions with a new administration. Some would rather slow down and wait out the current administration with the hope that a new White House occupant will grant more favorable treatment to important matters.

This is the landscape for the proposed Delta-Northwest merger.

In some ways, the deal does not face the thorniest political problems. The airlines' routes are relatively complementary, not overlapping, and they have not proposed closing airline hubs, which would be sure to raise congressional opposition from affected states.

The merger is also nothing like the proposed Alitalia takeover, which became a central issue in Italy's recent election. For many Italians, a national airline is a source of patriotic pride. Silvio Berlusconi, who won a convincing victory, made the case that he would find a way to keep the airline in Italian hands.

But airline mergers here, especially between two U.S. carriers, raise no such issues. In fact, many argue that strengthened U.S. carriers are needed to compete with foreign airlines, particularly in a contentious world market and with the advent of the Open Skies Agreement.

But several issues make the merger a political target. First, some labor-related issues have not been worked out, with Northwest's pilots in particular still questioning the implications of the merger on their seniority benefits. Second, this merger is seen as the harbinger for others. In recent months, we have seen several small airlines fail.

And a number of the other big American carriers may be spurred on to their own merger talks if the Delta-Northwest deal is approved. For the average passenger, higher fuel prices and fuel surcharges, more crowded and often late planes, fees for extra bags, and less generous frequent flier programs lead to a sense of uncertainty.

And at a higher level, angst about trade, corporations and globalization has been heightened by the Democratic presidential contest and the Democratic majority in Congress. Whether it is doubts about the North America Free Trade Agreement, expressed in the lead-up to the Ohio primary, or the deep Democratic opposition to the U.S.-Colombia Free Trade Agreement, Democrats especially may be looking for a "timeout" on sensitive mergers as well as trade agreements.

But despite the political pitfalls of the merger, the reality of the decision making is not likely to be governed by politics, nor is there any guarantee when approval or disapproval will take place.

The crux of the decision will be made by the antitrust division of the Justice Department with significant input from the Transportation Department. Members of Congress may cheer, complain or try to cajole, but mostly the decision is out of their hands.

And while some have suggested that the timing of the merger will allow a pro-merger Bush administration to rule on the matter, there is folly in making such predictions. The timetable and the outcome are not foreordained. Many thought that the proposed United-US Airways deal announced in spring 2000 would have a better chance of approval under the new Bush administration, but in July 2001, the Bush Justice Department announced its disapproval. Other deals have been OK'd in just a few months.

Only one thing is sure. The merger will be approved either quickly or slowly--or not at all--and the decision will be made by either the Bush administration or its successor. Clear enough?

John Fortier is a research fellow at AEI.