• Ad Age, Thursday, November 15, 2007 12:02 PM

Analysts say a consolidation wave among airlines may create a marketing nightmare of more competition, considerable new operational challenges and potentially less customer loyalty. Delta yesterday denied that it was in talks with United, but says that it open to the "right" deal.

Mike Boyd, an aviation analyst with Boyd Group, says that based on recent history like the U.S Airways/America West merger, a consolidated United would face a tangled mess of different fleets, different unions and different policies. He says consolidation only works if it lessens competition, decreases costs or allows higher prices, while, of course, keeping existing customers. Part of achieving those aims depends on competitors not rushing in to take advantage of new opportunities from service cutbacks.

"There's such myth and lore about consolidation," says Boyd. "The truth is there is no compelling industry need to merge airlines."

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