On 11th August, the pilots of Delta and Northwest agreed to the proposed merger between the two airlines, smoothing out the way for a new world’s largest airline to emerge. What does this mean for American and international commercial aviation world? A peek into history may give us some insights.

The glory of Pan-Am

The decline and demise of Pan-American World Airways in 1991 marked the end of an era in United States. Pan-Am was, for many decades, the de-facto flag carrier of the United States with an extensive international work. It was arguably the creation of American politics in the pre-deregulated industry before the early 1980s, as the airline flew international routes while other airlines were largely restricted to domestic routes.

For over three decades after the Second World War, Pan-Am held the stature as the leading international airline in terms of innovative products, as well as opulence in luxury travel, ushering in the jet age by launching the Boeing 707 in 1959, the iconic Boeing 747 in 1969 and record-breaking non-stops between New York and Tokyo, and Los Angeles and Sydney with the Boeing 747SP in 1976. Pan-Am also pioneered business travel with the launch of its clipper class, a market that was to become today’s lucrative business class. Pan-Am was a brand that Americans flew with pride – hardly a case with US based airlines today.

After more than two decades of deregulation, US legacy carriers are entrenched in their respective markets. Continental, US Airways and Delta have built a strong European network. American and Delta are strong players in Latin America while Northwest and United share the huge Asia-Pacific market. A merger between Northwest and Delta could see the emergence of a US international airline with a global network unseen since the days of Pan American at its height.

Can Northwelta re-capture Pan-Am’s brand excellence?

US airlines have ventured deep into the low-cost, low-price business model to stay afloat in the brutal competition in the deregulated US market. Such a model has inevitably crept into the international travel market, where winners of international accolades and awards such as those announced by Skytrax and the eminent Travel and Leisure magazine are usually barren of American airlines. Both the rankings did not feature a US airline in the top 10 this year.

On the bright side, the fact that Delta recently launched its New York-Mumbai flight with its brand new 777-200LR equipped with a new herringbone-styled Business Class is an encouraging sign indeed. Improving in-flight service and amenities would be a first step to build a strong brand affinity.

Learning from those who did it well, across the Atlantic

Successful mergers between KLM and Air France, Lufthansa and Swiss International may give indication of the possible benefits to be reaped by the Northwest-Delta merger. Lufthansa and Swiss, for example, cross sell their seats on their websites to provide customers with more travel options to choose from. Commonality in fleet management also provides an avenue to achieve cost efficiency. Air France and KLM have a highly similar international fleet of Boeing 747-400, 777; Airbus A330 and A340.

On the other hand, US airline leader American Airlines remains deep in the red with a US$1.4 billion loss in the second quarter of 2008 , which further emphasise the tough challenges ahead for the new industry leader.

Time to ponder…

What do you think? Can Delta-Northwest can emerge as a stronger airline and re-establish the position of American commercial aviation on the international stage?

Will we ever get back the glory days of Pan-Am for US aviation? Or will we forever have to pay for a packet of peanuts and to check-in our bags?

This is a special commentary written by guest contributor Hansen Yeong. Hansen’s father had worked for Singapore Airlines for more than 35 years and Hansen believes that he was born an aviation geek. He is an enthusiast in all forms of commercial aviation – from aircraft technicalities to airline management and marketing. Hansen is an Economics lecturer in Singapore and he enjoys writing. He is currently a contributor to SimpliFlying.com and working on his first novel.

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I wonder what it would be like to take a flight on the new Northwelta from Boston to Singapore via Detroit and Tokyo on a Boeing 747, once the US$17 billion merger between Northwest and Delta comes through. Will I get the Northwest experience or a predominantly Delta one, a mish-mash or none?

There’s been a lot of chatter around the merger, though more negative than positive (check out the one by Center for Asia Pacific Aviation for a different view). But I’ve hardly read anything about how the merger would affect the brand. Even though the new airline (largest in the US with over 70,000 employees) will be operated under the Delta name, which currently doesn’t have any 747s and also doesn’t fly to Asia Pacific, the brand experience can certainly be enhanced to make the sum greater than the parts combined.

Here are five ways how Northwelta can leverage on the merger to boost its brand (something soon-to-be-merging airlines can keep in mind too).

1. Setting realistic expectations. Some of my friends have spent nights in airport transit areas as they missed their flights – not because they were late, but they were at the wrong terminal for their code-shared flight. A merged airline is likely to operate from different terminals, surely at the beginning, and it should make the extra effort to ensure that the passengers are rightly informed. Setting realistic expectations that things may just go wrong is key to building trust in the brand over time. Customers don’t lose faith in the brand when things go wrong, but when they unexpectedly go wrong.
2. Ensuring a consistent experience. Nobody likes change, including airline customers. But since change is inevitable, especially when the industry is going through tough times, the airlines must ensure that customers are getting as consistent an experience as possible over time. Even when something needs to be drastically changed, information transparency should be prioritized and customers should be kept well informed ahead of time.
3. Providing value first, then charging for it. Lately, many US airlines have introduced a fee for checking-in a second bag. If I’m flying a full-service airline, I don’t expect to pay an additional fee for a second bag, as this has always been a free service. It would leave me disgruntled. Putting up with a fuel tax is understandable, but in this case, I’m not being provided any additional value for the extra cost. Since a merged airline generally has greater market power, it would be inclined to over-charge for some existing services. But it is important note that to keep customers happy, it is always better to provide a value-add before charging them for it.
4. Engaging the customer. One of the secret weapons used by great airline brands is deep customer engagement. One great example of this was Singapore Airlines’ campaign prior to their first A380 flight to London, which was written about in a previous article. Ensuring customer participation in times of change works especially well as they feel they have a stake in the process. During a merger, latest web technologies can be tapped to get customer feedback and incorporating it in the new plans. Everything from suggestions for the in-flight menu to their preferred mode of reservation of tickets can be captured and attributed to the person. Holding competitions is yet another simple way to keep the customer engaged with the brand.
5. Keeping employees happy. This is probably the most difficult of these five branding suggestions to achieve. Employees tend to suffer the most during a merger, and keeping them happy, though difficult, can do wonders for a brand. Merging airlines should work hand in hand with the pilot unions and other airline staff representatives to ensure their interests are not overly compromised. Often, cultivating a family-like culture (think SouthWest and Virgin) among the employees can go a long way in cheering up the mood in tough times. Employees then pass on these good vibes to the customer resulting in a great brand experience. As always, Happy Employees = Happy Customers = Great brand!

Ponder that!

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The next article in this series, about how airline bankruptcies affect the brand, will be posted on Wed, April 30. Do keep a lookout for it.

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• Thoughts on the United and Continental merger – as quoted in the press
• Landor Managing Director Allen Adamson reveals that creating a powerful airline brand is the ultimate test