Things in the Sky

I’m a big supporter of airline alliances. I think they provide lots of benefits for travelers, especially in terms of loyalty programs. But, apparently Rep. Oberstar wants to investigate them because they’re anti-competitive. This investigation can affect the plans of Oneworld to get anti-trust immunity, and of Continental to join the Star Alliance.

After talking to Steve Orr (site here), Oberstar’s example about flights from New York JFK to Paris don’t make sense, as that makes it sound that he is excluding Newark but including Orly, which doesn’t make much sense. Also, two of those six carriers were probably Pan Am and TWA. I doubt those carrier’s bankruptcies were caused by any alliances. Orr also mentioned to me that since 1990, many more cities have gotten transatlantic service.

But the examples on market share are a bit fuzzy, too. Does he just mean nonstop flights, or is he including connecting service? The latter accounts for competition between the alliances. I don’t have to fly to Paris nonstop. I can change in London or Frankfurt if I so desire.

My main concern is where does this stop? Why is it bad for Star carriers to have most of the service to Frankfurt from Chicago but fine that Aer Lingus is the only airline to fly to Shannon from Chicago? Does nonstop competition need to exist on every route? Do we need to resurrect the CAB, too?

Meanwhile, Oberstar’s statements on high fares at alliance hubs is almost laughable, simply because a hub that Northwest defends vehemently has given Oberstar’s state more air service than it demands on its own. For some more information on Northwest and Oberstar, I highly recommend this post on Swelblog. (By the way, doesn’t it seem a tad bit ironic that this investigation is starting after Delta has agreed to keep jobs in Minneapolis?)

The Hudson Crossing blog makes some great points about this issue. Namely, anti-trust immunity has been highly beneficial to Oberstar’s state of Minnesota, as the codeshare between KLM and Northwest has been very successful. The blog makes another good point about Oberstar’s previous example: “We don’t need six carriers operating from JFK to Paris. If JFK to Paris is so lucrative, any airline could start flying it tomorrow.”

Oberstar calls anti-trust immunity a “de facto merger.” Good. That’s what it should do, considering countries like the United States have antiquated, protectionist foreign ownership rules. Alliances are the best way to get around them. Instead of going on a witch hunt about anti-trust immunity, Rep. Oberstar should focus on ways to increase the amount of foreign capital that can flow into other airlines.