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Delta, UAL miss connection
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April 24, 1998: 6:21 p.m. ET
Air alliance talks stall in slipstream of American-U S Airways team-up
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NEW YORK (CNNfn) - Negotiations for a joint marketing deal between Delta Air Lines and United Air Lines stalled on Friday after running into opposition from Delta's pilots.
Delta and United had been expected to announce a strategic alliance, including a code-sharing and marketing linkup under which travelers could combine their frequent flyer miles on both airlines.
Late Thursday, American Airlines announced it had concluded a similar marketing alliance with U.S. Airways.
The Delta-United deal had not been expected to involve a formal merger of assets.
Delta said while it had been "in extensive discussions with United Airlines concerning a possible global strategic alliance, including code-sharing and other cooperative commercial activity," the two companies had not yet reached a conclusion and "may or may not" reach one in the future.
However, United said the talks have been suspended and may or may not be resumed in the future.
An airline industry source told CNNfn the main sticking point in alliance negotiations is winning approval from Delta's pilots. Absent that problem, the two airlines are very close to an agreement, the source says.
Pilots, a powerful organized labor group, typically oppose any mingling of labor forces because it has the effect of moving individual pilots down the seniority list for promotions.
Denny Dolan, chairman of Delta MEC, the airline's pilot union, said Friday the union's conditions for code sharing discussions are full board membership, including a board vote for the pilot director and full, ongoing access to all information pertaining to the proposed agreement.
"These conditions are necessary to provide a level playing field between the Delta and United pilots, and any discussions of a possible arrangement between the carriers," he said.
Dolan said the MEC will approach alliance talks with the protection of the Delta pilots jobs as its "number one priority."
"You have my absolute assurance that the best interest of the pilots will be protected," he said. "Period."
Word of the pending announcement came after U S Airways (U) and AMR Corp.'s (AMR) American Air Lines announced a marketing alliance of their own which involved combining frequent flyer clubs but not flight codes, at least as yet.
Rumblings of the possible alliance, however, has some political leaders concerned.
"This news only heightens our zeal to move forward with pro-consumer legislation to promote new airline entry," said Sen. John McCain (R-Ariz.), chairman of the commerce, science and transportation committee.
"We have worked over the past year to make changes in an aviation environment that suffers from institutional impediments to competition, such as slot controls and perimeter rules," he said.
McCain added that would-be competitors already face numerous barriers to market entry. Consolidation among the industry's "big six," he noted, could make matters worse.
"New entrants face anti-competitive restraints when competing with the large established carriers," he said. "These alliance announcements underscore the importance of size advantages to the established carriers, especially since the carriers will not benefit from the cost efficiencies typically associated with a merger."
Shares in both Delta and United closed lower Friday, with Delta (DAL) off 3 to 117-3/8 and United (UAL) down 15/16 to 89-5/8. 
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