Merger mania

This week we saw another flare-up in the airline merger mania in the US.

Hedge fund Pardus Capital Management LP is pressuring Delta Airlines to merge with United Airlines to fight soaring fuel costs. The merger will spawn a huge carrier - by far the world's largest - with a route network that stretches across all continents. The marriage will also create millions of dollars in annual savings.

Now everyone is getting ready for the game of musical chairs. Everybody wants a merger partner. Which combination will have the largest route network? Who will get the most planes? Which merger produces the most destinations? How about frequent flier programs?

We will see some very interesting competitive responses.

Keep an eye out for the airlines that aren't asking questions about route networks, destinations and all the other conventional themes of mergers. What really counts is the value of the service proposition. Mergers are notorious for creating labour strife in unionized workforces. Disgruntled employees, shoddy operations and grumpy service are the norm after such corporate events.

The debate isn't so much about routes and fleets. It's about the management of human capital on the frontlines and in the executive ranks. Those organizations who succeed will be thinking outside the box of mergers.