“I think we are seeing an evolution, seeing these alliances become tighter-knit partnerships,” noted AMR, parent company of American Airlines, chief financial officer Tom Horton at a recent travel conference.
Those are words that should terrify passengers, suppliers, airports and travel agents. His words, current action within the antitrust-immunized alliances and the crumbling of the Open Skies treaties are cause for serious concern.
Already, Delta and Air France-KLM are creating a joint venture for international flights; United and Aer Lingus are forming a new joint-venture airline that will not fall under the normal constraints of bilateral agreements; American Airlines has promised that it will examine a joint venture with Japan Air Lines; and Lufthansa, United, USAirways and Continental are painting their planes the same colors.
These are moves not made by airlines engaged in a loose confederation of partners. These are moves made by new Frankensteinesque airline formations being pieced together with the full cooperation of our own Department of Transportation.
Under their recent mantra, “anything good for the major airlines is good for the country,” they are totally ignoring the competitive consequences of their actions for consumers, suppliers and travel agents. Their actions are misguided. Though well-intentioned in these days of airline financial stress, this organization of a government-approved oligopoly for international flights will have far reaching negative implications as the airlines regain balance-sheet strength.
The antidote to airline alliances has always been the passage of European Union (EU)-U.S. and Japan-U.S. Open Skies rules that will allow competing airlines to fly between any two point in Europe and in Japan. But the second phase of these negotiations are under political pressure.
This sets up a worst-case scenario. Government-approved oligopolies with unchecked pricing and negotiating power with significant countervailing economic force provided by a stalled Open Skies agreement.
Other articles on this subject:
AA, BA, IB, et.al. get antitrust immunity, consumers get less competition
As airline alliances grow, do frequent fliers really benefit?
Senators ask Transportation Department to heed warning on airline alliances
Who should control airline antitrust immunity? DOT or Justice?
DOT and DOJ bicker about airline alliances
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
