The rise of airline alliances has effectively reduced the control of more than 80 percent of transatlantic flights to three competitors — Oneworld, Skyteam and Star Alliance. Oneworld is an alliance of American Airlines, British Airways, Iberia, Qantas, Japan Airlines and others. Skyteam’s major partners are Delta, Air France/KLM and China Airlines. Star Alliance is a blend of United/Continental, Lufthansa, Air Canada and Singapore Airlines.
Some of these airlines have antitrust immunity, some don’t. Those who have antitrust immunity have all set up joint ventures with separate boards of directors and executives to jointly manage their international operations and to share the profits from service.
Legally-speaking, Delta doesn’t fly across the Atlantic any more. Their airplanes fly with Delta crews, but they are flying under the banner of Skyteam and they have coordinated schedules with Air France/KLM and others and the joint venture shares the joint profits.
Alliances are already jointly coordinating flights, schedules, route planning, marketing efforts, advertising, sales campaigns, frequent flier programs, catering and maintenance. These alliances are defacto mergers of the alliance’s international business.
These concerns were voiced by me before the Senate Commerce Committee during their hearings on the United/Continental merger, but did not resonate. Now this new interest in possible anti-consumer consequences by regulators on the other side of the Atlantic is welcome.
Last month, for the first time, European Union investigators began looking into whether pricing and scheduling agreements between members of Skyteam are harming consumers. The European Commission has indicated that such deals could breach EU antitrust rules. The airline interaction has gone much further than the coordination of schedules that regulators first envisioned in agreements signed in 2009 and 2010.
EU findings regarding Skyteam will have an impact on Star Alliance and Oneworld. A transatlantic route system effectively controlled by only three behemoth airlines is not healthy for consumers.