While many of us take airline alliances such as Star Alliance, SkyTeam and OneWorld for granted i.e. providing the consumer with seamless travel options, airline club benefits, lounge access and other amenities, the United States Department of Transportation (DOT) is always involved in “behind the scenes” approvals concerning such alliances.
Over the weekend (2/13/10) the DOT advised it would tentatively grant antitrust immunity to American Airlines and four international partners to form a global alliance. Under the proposal, the airlines must agree to conditions to protect consumers and preserve competition. If the decision were made final, American and its OneWorld alliance partners – including British Airways, Iberia Airlines, Finnair and Royal Jordanian Airlines would be able to more closely coordinate international operations in trans-Atlantic markets (including hubs in the United Kingdon, Spain, Finland and Jordan). Of note, the trans-Atlantic market is the most competitive route in the world.
In their opinion the DOT tentatively found the OneWorld Alliance would provide passengers and shipping entities lower fares on more routes, increased services, better schedules and reduced travel and connection times. In addition, DOT mentioned the alliance would provide increased competition with Star Alliance and SkyTeam, the two other major airline alliances. As many know, competition benefits the consumer with airfares and services in the consumer’s favor.
One issue which continually is raised is competition from the United States into Heathrow (London), the most popular hub airport in the world (locally, there is non-stop service between DEN (Denver) and LHR (Heathrow). The DOT is proposing the OneWorld Alliance make four (4) pairs of slots available to competitor air service between the US and London.
One vocal opponent of the antitrust immunity has been Virgin Atlantic. The airline developed by Sir Richard Branson has been trying to break into the lucrative London –U.S. routes with varied success. As a frequent traveler from experience Virgin Atlantic is a terrific airline and offers a flying experience akin to the days prior to deregulation. The airlines objection to the tentative approval is note-worthy as Virgin Atlantic will be competition with three alliances and their access to global networks of airlines and travelers.
If final approvals are granted, my belief is the average economy class passenger will benefit from the increased competition and options for travel worldwide based on the concept of increased competition drives fares lower and service levels higher.
The DOT said interested parties are invited to show cause why the proposed decision should not be made final. Objections are due in 45 days, and answers to objections 15 days afterward. Following the comment period, the DOT said it would review all filings and then issue a final decision. The proposed decision, comments and other documents in the case are available on the Internet at www.regulations.gov, docket DOT-OST-2008-0252. For more information, visit www.dot.gov.