[Iowa-dx] FW: [usgp-dx] Statement on Delta/Northwest Merger: Contraction vs Consolidation

[Hart, Holly J]

________________________________________
From: natlcomaffairs-bounces@green.gpus.org [natlcomaffairs-bounces@green.g=
pus.org] On Behalf Of Dean Myerson [greens@deanmyerson.org]
Sent: Friday, April 18, 2008 4:29 PM
To: natlcomaffairs@green.gpus.org
Subject: [usgp-dx] Statement on Delta/Northwest Merger: Contraction vs Cons=
olidation

http://www.greeninstitute.net/?q=3Dnode/503

THE DELTA/NORTHWEST MERGER:
Choosing Contraction versus Consolidation
By
Frans C. Verhagen, M.Div., M.I.A., Ph.D.,
Green Institute Sustainability Fellow
President, SAVIA Associates International
4/17/2008

Of the merger agreement, Delta CEO Richard Anderson said, "Our need
to respond to the pressures of dramatically rising fuel costs and a
softening U.S. economy drove us to take a closer look at all options
to strengthen our future."

I wonder whether he has seriously looked at a planned contraction
strategy in which he not only takes account of fuel prices and the US
economy, but also the slowing global economy and the requirements of
the ever deepening climate crisis. Did he consider the direction of
the aviation industry within a long-term sustainable transportation
plan for the US? Is he only thinking of "our future" as the future of
Delta or the future of the US aviation industry or even the future of
the global aviation industry? These questions are important because
his merger not only substantially impacts on the domestic industry
and the US society, but also on the global industry and the world's
social system.

The argument being raised here is that a planned contraction strategy
by Delta and other airlines might be preferable to the proposed
consolidation, and future ones by other airlines. This is an
important argument, because Congress and the Justice Department still
have to make up their minds on the Delta/Northwest merger, and
because other airlines may rush to merge. They may consider this for
the two reasons quoted above and the calculation that a Justice
Department in a new administration may be far more reluctant in
approving large mergers than the Bush Administration.

What is a planned contraction strategy?

Contraction is taking place all over the industry by the reduction of
air services and capacity, the shutdown of airlines, etc. These
contractions are considered to be undesirable because the industry,
like other industries, is still based upon the growthism syndrome
where bigger is always considered better. Planning a contraction
strategy counteracts this growthism syndrome and places sustainable
development of the industry with qualitative improvements central to
the industry's future. Transitioning to sustainable aviation,
therefore, means considering reduction of quantitative growth or
contraction as socially and ecologically desirable. Focusing on
qualitative growth becomes a new strategy that takes into account not
only fliers, but the well-being of domestic and global societies and
the physical environment which is mostly threatened by the ever
deepening climate crisis.

Planning a contraction strategy means using an airline's
transportation experience and resources in a new way. It raises
questions of determining its role in a long-term surface
transportation system where aviation is integrated for long
distances, questions of investments in surface transportation modes,
questions of advocacy of an efficient and fully integrated
transportation system, questions of taking a position on an
international economic system that enriches the few, impoverishes the
many and endangers the planet.

Planning for a contraction strategy acknowledges the thermodynamic
fact that air transportation is 4-10 times more energy intensive than
other modes of transportation and that its GHG emissions are,
therefore, also 4-10 times higher. Notwithstanding major improvements
in fuel technology and aerodynamics over the last 40 years, emissions
have reached a plateau where further  small efficiencies will not
face up to the challenge of 90% reduction of emissions by 2050 as
calculated by British journalist Monbiot. Thus a contraction strategy
planner will acknowledge that stopping growth is not only necessary,
but that contraction is necessary. Planning such contraction rather
than having pure market forces determine the outcome is a human and
ethical thing to do.
Planning for a contraction strategy also includes a strong
involvement in the federal transportation legislation, not as
advocates for one's own strictly defined self interest, but as
transportation specialists who are able to see the larger domestic
and global social and ecological challenges. Why is it that both air
and surface transportation funding are still separate rather than
integrated? Why is there no long-term sustainable master plan for
transportation that integrates all modes of air and surface transportation?

  The citizen sustainable aviation movement in the USA, with which
SAVIA closely collaborates, has proposed a $300 billion 15 year
program to make that integration possible. The funds for this IITS
Initiative would not only enormously improve the nation's
infrastructure and create millions of real and good-paying jobs; they
would also result in the aviation industry becoming smaller in a
socially and ecologically sound way.

How is an airline or an airport or airframe manufacturer to plan for
such planned contraction?

Together with the various modes of surface transportation, they can
start realistically planning, not for the next quarter or year, but
for the next thirty years. If done on a long-term basis, the urgency
of the ever deepening climate crisis is to be considered first.
Scenarios abound about the Earth's climate, but one of the major
conclusions of the IPCC is that reduction of a magnitude of 80% by
2050 is necessary. James Hansen and associates recently have argued
that even greater reductions are needed in order to arrive at 350 ppm
target of CO2, "if humanity wishes to preserve a planet similar to
that on which civilization developed and to which life on Earth is
adapted". Climate change negotiators in Thailand are very carefully
scrutinizing the emissions of air transportation with its still
expansionistic tendencies of which the consolidation trend is one
part.  In other words, minor advancements in fuel and aerodynamics
are inadequate, the industry has to contract and, hopefully, in a
humane and planned way. It would be in the interest of the aviation
industry to join the US citizen sustainable aviation movement in
signing on the IITS Resolution that can be found at
<http://www.susaviation.com/>www.susaviation.com and
<http://www.us-caw.org/>www.us-caw.org

Planning for a contraction strategy is to be based on discussion,
debate, dialogue. This dialogue should not only take place at the
executive levels of corporations, but with all the stakeholders of
this and other mergers. It is counterproductive for Mr. Anderson of
Delta to pursue a divide-and-conquer strategy with the pilots. He
entered into a new contract with Delta pilots, which gives them a
raise and a 3.5 percent stake in the new company, and giving him more
flexible work rules with which to run a combined airline. The
Northwest pilots were left out. Their union chief, Dave Stevens, said
the group "will use all resources available to aggressively oppose
the merger." These conflicts happen if people's rights are trampled
on. So, part of this planned contraction strategy is a well-planned
participatory decision-making process.

In this dialogue the issue of re-regulation is a most important
issue, because aviation and surface transportation are part of the
essential infrastructure of any government. Maynard's article in the
NY Times of April 17 entitled "Did Ending Regulation Help Fliers?" is
a journalistic approach which focuses on fliers without considering
the larger US public and society, let alone considerations of global
impacts. I am suggesting that Congress establish SATCO, the
Sustainable Aviation Trustee Council which would function as a
"trusted broker". It would consist of three of FAA representatives,
three members of Congress, three representatives of the US citizen
sustainable aviation movement, two international representatives, one
of ICAO, one from WMO. Given the domestic and global economic
downturn, the ever deepening climate crisis, such a new institution
will be far better equipped than a revised Civil Aviation Board
developed within a very limited planning framework, because SATCO
places the industry in the realistic economic, climatological, and
even ethical contexts of the 21st Century.

In conclusion, contraction in the airline industry and a decrease in
the growth projections due to the permanent increase in fuel costs
during this peak oil period and many other reasons may not be a bad
thing at all. As a matter of fact, it may a blessing in disguise if
the contraction is planned wisely, i.e. both strategically, ethically
and tactically.
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