Uffta Ya’ll: The Delta-Northwest Merger Adele Hall Abdul Qadir Sheikh Daniel SchwartzIn the Beginning Airmail Act of 1925 Air Commerce Act of 1926The Early Days of Delta • 1924 • 1929 • 1930 • 1978The Early Days of Northwest 1926 1927 1941 1978The 1930s 1930 1934 1938 The 6 passenger Lockheed Orion, used by Northwest Airlines in the 1930s The Stinson Model A, used by Delta Airlines to deliver mail overnight in the 1930s.1938 Regulation Entry & Exit Rates The Douglas DC 3, first flown by Northwest in 1939. Northwest hired its first stewardess in 1939.Effects of Regulation On Airlines On Consumers Delta was the first airline to launch jet service in 1959 with the Douglas DC-8. A fancy airplane meal: one way to attract passengers.Events Leading to Deregulation CAB Wide-body Aircrafts Middle Eastern Oil Embargo of 1973 Inflation Economic Downturn Government Regulatory ReformsAirline Deregulation Act 1978 Regulatory Controls Air Cargo Domestic Route Operation Air Passenger Eliminated RestrictionWhat Remains Regulated International Liberalized Markets Antitrust Exemption Essential Air Service DOT Reward Program SafetyConsequences of Deregulation Hub and Spoke Centers of Operation New & Low Cost Carriers Increased Competition Discount FaresConsequences of DeregulationA fancy airplane meal: one way to attract passengers.Consequences of Deregulation Growth in Air Travel Frequent Flyer Programs Increased Bankruptcy/Unhealthy Competition Health of IndustryDelta After Deregulation Merger Agreement Acquisitions New Operations “Skymiles”Northwest After Deregulation New Routes Acquisitions NWA-KLMHistory of Mergers 1980s Local Service Carriers Ozark, Republic, Southern 1990s First Persian Gulf War Service IssuesMergers Passenger Rights and Issues Delays Travel Performance Stranded Passengers Contract of CarriageUnregulated vs. Regulated CAB Prive Regulation Service and Frequency Interline Agreements Cost-Plus AnalysisMergers Consumers and Employees Affects Seniority Operation Integration Traveler ProgramsMergers Congressional Intervention Triggered reactions DOJ Delta-Northwest Competition Operating Costs ReductionsMergersConclusion Mergers Bad record Regulatory Environments Regulation Past ReintroductionDebate Mergers Pros ConsDiscussion Questions What is the best possible outcome of the Delta-Northwest merger for both airlines and passengers?Discussion Questions Based on the previous discussion of the airline industry under regulation and deregulation, what are possible mechanisms for achieving the best outcome?Discussion Questions Aside from mergers, what techniques can be implemented to improve the performance of the airline industry.Thank you… Enjoy your
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