Delta and Northwest agreed to a merger yesterday that would create the world's largest airline and could trigger a wave of consolidation and fare increases.

The pact came amid one of the industry's most tumultuous periods as three airlines collapsed in one week and American Airlines, the current largest carrier, canceled thousands of flights because of missed aircraft inspections.

The merger would create a global giant with more than 800 jets, 6,400 daily flights and nearly $32 billion in annual revenue. The carriers estimate the value of the new company at $17.7 billion.

Both Northwest and Delta serve Hawai'i. Delta has five daily flights from Honolulu and two daily flights from Maui to the Mainland, said state transportation spokesman Scott Ishikawa. Northwest operates three international and six domestic flights a day from Hawai'i.

If the merger goes through, Ishikawa said the concern for the state would be flights to cities now served by both carriers.

However, the two airlines don't appear to have a lot of overlap in their routes from Hawai'i to the Mainland, said Scott Hamilton, an industry analyst based in Issaquah, Wash. Northwest's hub is Minneapolis-St. Paul, and Delta's is Atlanta.

PUBLIC MAY SUFFER

The proposal could be a catalyst for further consolidation among the big airlines at a time when the industry is challenged by high fuel prices, a weakening economy and the cost of maintaining an aging fleet.

The next possible combination, according to many industry observers: United and Continental, which would then leapfrog the new Delta as the world's largest carrier. The two airlines have talked about merging in the past.

For the flying public, the Delta-Northwest combination by itself might not immediately lead to widespread fare hikes because the two airlines have relatively few routes that overlap, but further consolidation could mean higher fares and worsening of service, analysts said.

"It's good for them, but it's bad for all of us," said Richard Gritta, professor of finance and transportation at the University of Portland in Oregon. "More concentration means higher prices and less service."

"For the two carriers, this merger is a very important step to keep from going out of business," said Dana Hobart, an aviation law expert at the Los Angeles firm of Hennigan Bennett & Dorman. "But for the flying public, it's not so good because there will be reductions in routes and services."

The proposed Delta-Northwest merger would not affect the carriers' frequent fliers, who are already members of the same international Sky Team alliance.

LONG WAY TO APPROVAL

If the merger closes, the new airline will be named Delta, with headquarters in Atlanta, where Delta is now based. Delta CEO Richard Anderson would be its chief executive.

The deal needs the approval of the Department of Justice, which will determine whether it violates antitrust laws. That review will take months.

The merger faces significant hurdles from consumer organizations, which are fearful of rising ticket prices; small communities that are worried about losing service; and several powerful members of Congress.

Rep. Jim Oberstar, D-Minn., the chairman of the House Committee on Transportation and Infrastructure, already has vowed to try to block the merger.

The biggest challenge might come from labor unions, which quickly blasted the deal. The pilots union for Northwest said it would "aggressively" oppose the merger.

The International Association of Machinists and Aerospace Workers union, which represents 12,500 Northwest ramp service workers, customer service agents and technicians, also vowed to kill the merger.

"We firmly believe this merger is not in the best interest of passengers, employees or the communities these airlines currently serve," the union said in a statement.

AIRLINES 'A PERFECT FIT'

Delta and Northwest said they had no choice but to merge as the airlines face "significant economic pressures from rising fuel costs and intense competition."

Fuel expenses have increased 70 percent since last year. Rising fuel expenses contributed to the demise of ATA, Aloha Airlines and Skybus earlier this month.

Integrating the two airlines is expected to cost no more than $1 billion, which would be a one-time expense, the carriers said.

The merged airline would be more financially fit to overcome the industry's "boom-and-bust cycle," said Northwest's chief executive, Doug Steenland.

The deal would join two big airlines with complementary route networks. Delta is the leading U.S. airline in the trans-Atlantic market and has strong domestic routes, especially in the Northeast, South and West. Northwest has been one of the leading U.S.-Asia carriers for more than half a century, and it's a formidable domestic presence in the upper Midwest.

"Delta and Northwest are a perfect fit," said Delta CEO Anderson.

The new Delta would have major hubs in Atlanta, Detroit, Minneapolis/St. Paul, New York, Amsterdam and Tokyo.