Are such alliances good for travelers who value cheap fares, be they cheap airlines tickets or cheap vacation packages? Airlines belonging to such alliances claim that they allow customers to more easily make reservations and get to desired destinations because partner airlines act together on reservations and schedules. The Justice Department, some Congress members and consumer advocates are concerned over how such alliances effect competition.
Currently there are three major global alliances:
Star which includes United Airlines, US Airways, Continental, Air Canada, and Air China
Sky Team which includes Delta, Air France and KLM
Oneworld which includes American Airlines, British Airways, Japan Airlines, and Cathay Pacific
These alliances have been given antitrust immunity and are allowed to operate as joint ventures. Immunity allows airlines to openly communicate regarding which airline should fly which routes, at what times, and agree on prices for jointly offered seats. Operating in a joint venture structure allows them to cooperate in shared markets, acting as if they are a single airline, sharing overhead costs. Frequent flier points can typically be used on any partner airline within an alliance.
The antitrust division of the Justice Department, as well as several consumer watchdog groups has twice in the last nine months tried to block requests to form immunized joint ventures out of the belief that less competition will lead to higher prices. Both times the Justice Department was stymied by the Transportation Department, which makes the final decisions on such matters.
Questions have been raised in Congress about whether alliances are in the best interests of passengers. The Chairman of the House Transportation Committee, last year pushed a bill through the House that would have ended existing immunity grants and required airlines to reapply if they wanted to continue them. This bill never received Senate approval.
www.cheapfares.com