Delta-Northwest merger raises frequent flyer program questions

On Monday, the on-again, off-again merger dance between Delta and Northwest took a definitive step forward with the formal announcement that terms of the tie-up had been agreed upon. The two airlines will now seek regulatory approval for the combination.

For members of the two carriers' frequent flyer programs, the overall prognosis is mostly neutral or marginally positive, with one negative and a handful of questions that won't be answered any time soon.

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First, no miles will be lost or significantly devalued. Assuming the merger is ultimately approved, travelers with miles in both programs will have those miles combined into single accounts.

The merging of Delta SkyMiles and Northwest WorldPerks accounts will result in a program with more members with more miles. That's a double-edged sword. On the plus side, those members whose accounts have been combined will be better able to afford awards because their average account balances will be higher. But the resulting increase in demand for award seats won't be supported by a proportionate increase in available award seats. On the contrary, once the two airlines have shed their redundant flights, the resulting network will be less than the sum of their current operations. That, after all, is one of the efficiencies mergers are designed to deliver.

So in the short term, the difficulty of securing award seats in exchange for frequent flyer miles will be exacerbated.

On the positive side, the combined route networks of Delta and Northwest will be bigger and broader than currently available from either carrier individually, resulting in more opportunities to earn miles, and to redeem them.

Because both airlines participate in the SkyTeam global airline alliance, SkyMiles and WorldPerks are already more alike than they are different. Where there are incompatible differences, the Delta feature will probably trump Northwest's.

So, for example, Delta's recently introduced Pay with Miles feature is likely to be retained, in place of Northwest's periodic Cash and Miles offers. And Delta's conservative mileage bonuses for elite members will probably replace Northwest's more generous bonuses.

Again assuming the new program will be more like Delta's current program than Northwest's, the program-affiliated credit card will be the SkyMiles card, issued by American Express. Depending on one's priorities, there's both a downside (higher annual fees, limited merchant acceptance) and an upside (aggressive bonus-mile offers, Pay with Miles) to the American Express scenario.

Finally, there are the questions regarding the program's overall philosophy and approach to customer loyalty. How generous will the new airline be when it comes to making free seats available to frequent flyer program members? Will the new program be oriented toward business travelers at the expense of less frequent flyers? The reverse? How much emphasis will be on cost-cutting, at the expense of customer service?

Ultimately, the answers to those questions will determine whether the merged carriers deserve the continued loyalty of their current customers.

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