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Northwest Upper Midwest impact great

ST. PAUL - Upper Midwesterners know Northwest Airlines dominates air travel, but it is not just the air carrier's flights that make an impact on the region.

Northwest's footprint also is comprised of thousands of jobs, and the company is considered a strategic asset for the region's economic health and stability.

Minnesota, North Dakota, South Dakota and Wisconsin are concerned about keeping those jobs as the airline considers a merger with Delta Air Lines.

The majority of Northwest's 11,500 regional employees work in Minnesota, most based at the Minneapolis-St. Paul International Airport. About 1,000 executives work out of Northwest's headquarters in Eagan, and about 300 workers are based at Northwest's reservation center in Chisholm.

Dan McElroy, Minnesota's commissioner of employment and economic development, said the state is very keen on Northwest retaining a strong presence in the region even if the company merges with Delta.

"The hub (at Minneapolis-St. Paul International Airport) is incredibly valuable," McElroy said. "It's very important for Minnesota to preserve the hub because it attracts businesses and travelers wanting to fly non-stop to over 100 locations nationally and internationally. Also, we are a service access point to a large number of people in more sparsely populated states."

Northwest's Eagan jobs also are important, he said.

"We don't take those jobs for granted," McElroy said. "These are high-paying skilled jobs, and those executives have a big civic impact in their communities," including volunteer work and philanthropy.

Northwest Airline's substantial economic impact on the Upper Midwest region is not lost on U.S. Rep. Jim Oberstar, D-Minn., House Transportation Committee chairman.

"Put it this way, the Minneapolis-St. Paul hub has about a $15 billion economic impact on the metro region and state and you can extend that into Wisconsin and northern Iowa as well," Oberstar said. "So, the economic significance of Northwest to Minnesota, Wisconsin, Iowa, North Dakota and South Dakota environ is very significant. It's important for business travelers particularly, it's important for tourism in the state, and it's important to maintain those airline services in cities at the end of the spokes in the hub and spokes system."

Bob Anderson is a Boise Cascade executive in International Falls, Minn., and chairs the local airport commission. He said about 22,000 people a year - from the area, as well as from parts of Ontario, Canada - use Northwest's Mesaba Airlink service at the local airport to Minneapolis-St. Paul. Mesaba runs three flights a day, more in the summer.

Anderson said Northwest service in International Falls is very important for the local paper industry and for tourism.

"Our communities have been able to keep a strong enplanement," Anderson said. "And we rely on Northwest in terms of public transportation. We don't have bus service, we don't have trains, so the airline is the last public transportation we really have."

But flying between International Falls and the Twin Cities is costly, about $438 round trip, Anderson said.

Higher fares and lack of competition to Northwest's dominance is also a sore spot for Minnesota's less populous neighbors in North Dakota and South Dakota.

Dan MacIver, North Dakota Chamber of Commerce president, said he is part of an on-going conversation with Northwest officials about fare pricing and increased service in the state. Despite his concerns, MacIver commends Northwest Airlines for having served North Dakota since the airline was created in 1926.

"I think that's something to pay attention to," MacIver said. Northwest "has been consistent in our state. We've watched a lot of airlines come into our state and leave."

Northwest serves North Dakota's four major and two smaller airports. In 2007, the carrier served 414,000 passengers through those airports. Northwest also employs about 200 people in Minot, through its vacation wholesale company, NWA WorldVacations.

South Dakota also relies on Northwest's strong presence.

Evan Nolte, president of the Sioux Falls Area Chamber of Commerce, said the importance of Northwest to South Dakota's economy cannot be overstated.

"Having a major airport and good airline service is a prerequisite to economic development," Nolte said. "City Bank is here and other financial service companies, we were successful in getting new ethanol headquarters here. Cities don't get that without having a major airport and air service."

Nolte said many in the state are watching the Northwest Delta merger very closely and have big worries about the future of service and pricing in the state.

"The prices are relatively high right now," Nolte said. We don't know how this is all going to come down. We understand major airlines face a lot of challenges as other airlines do in this environment."

While it's unclear what a merger with Delta would mean for the region, there is wide speculation that there would be few benefits for those living in North Dakota, South Dakota, Wisconsin and Minnesota, particularly in remote areas served by Northwest's Airlink carriers.

Alfred Marcus, a professor in the University of Minnesota's Carlson School of Management called the proposed merger "a terrible failure of imagination on the part of executives."

"Becoming bigger is not a strategy," Marcus said. "There's no plan for attracting customers, maintaining loyalty, or improving the experience of customers and employees."

However, Marcus said there is incentive for a merged airline to improve service and fares to so-called "spoke" communities, like those that neighbor the Minneapolis-St. Paul hub. He said a drop of even just five passengers can make the difference in the profitability of a flight. So, Marcus said, a Northwest-Delta airline would have the burden to show it will maintain or increase service to thinly traveled routes, and that it can create a personal connection with passengers to keep them.

Chief executives of the two airlines assured Sen. Amy Klobuchar, D-Minn., that they understand Northwest's importance to Minnesota.

"We believe that the right transaction would also be beneficial to employees," Northwest Douglas Steenland and Delta's Richard Anderson wrote to Klobuchar.

"An end-to-end merger would produce a more financially stable airline, one better able to withstand financial shocks such as the recent escalation in the price of oil. A new, more competitive airline would mean more jobs and job opportunities. We are very much aware of the special employment concerns of Minnesota and would take those issues into consideration in any transaction that we might consider," Anderson continued.

"We also believe the right kind of merger would reduce costs, improve the scope of service and bolster competition in our industry."

Anderson and Steenland said they could see service improving to smaller airports.