Anyone who doesn’t think that airline alliances give industry members plenty to smile about, only needs to look at the current Star Alliance plans for expansion to as many as 50 airlines to understand that the airlines see something good.
The current state of airline alliances make monopolistic and price-fixing practices that have gotten airlines in trouble on the cargo side of their business, perfectly legal on the passenger side.
Somehow the world governments feel that granting airlines collusion authority when it comes to cargo is bad and granting the same collusion authority over passenger pricing and route design is fine.
The history of economics is full of stories of pricing power gone amiss when monopolies and oligopolies have formed. There are few if any examples of consumers and suppliers winning when an industry consolidates into only a small number of competitors or when it arranges itself to avoid competition. We are seeing that happen with the international routes of the airlines.
What is illegal within the confines of the U.S. domestic market is deemed legal internationally by our DOT. I fail to see the benefit for the American consumers, airline suppliers, corporations, airports or airline workers.
Other than integrated frequent flier programs, what’s the benefit for consumers?
Am I missing something?
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.
