Arnold should be terminating airline alliances — not supporting them

by Charlie Leocha on March 31, 2009

The Oneworld alliance has gained the support of California’s Governor Arnold Schwarzenegger in its application for antitrust immunity status, or ATI. But has the Governator seen this issue from the travelers’ side?

During the past year (actually for years), British Airways, American Airlines, Iberia Lineas Aereas de Espana SA, Finnair and Royal Jordanian have been seeking ATI status which would allow the airlines to work more closely together and bypass monopoly laws in the U.S. Should they gain ATI approval, they would be able to work together on scheduling and pricing in a deal that would also involve revenue sharing.

While the other alliances, Star and SkyTeam, have alliances already approved, the Oneworld alliance evidently is asking for a bit more antitrust immunity than that given the other players. Not only will they have a stranglehold on London Heathrow, the busiest Europe hub for transatlantic flights, but they want stronger powers to negotiate with suppliers and agents.

At least that is what I gather from hearsay remarks. The full details of their application are not publicly known, since their application for ATI has been shrouded in secrecy.

During this month of “sunshine” in government, the Oneworld filings with the Department of Transportation (DOT) are still heavily “redacted.” Reporters and consumer advocates are not allowed to view their comments sent along with their request for antitrust immunity. Only lawyers who promise secrecy can take a peek at what AA, BA, Iberia and their friends are are asking for.

Schwarzenegger urged the DOT to approve the airlines’ application, which would “allow them to compete with the Star and SkyTeam alliances, which already have broad antitrust immunity for transatlantic flights.”

Since he is not a lawyer and his lawyers are not allowed to pass along the information under secrecy provisions imposed by DOT and Oneworld, I can’t imagine how he knows that the immunity requested by Oneworld is the same as that already granted to Star and SkyTeam.

His assertions that the alliance antitrust immunity “will positively impact the air travel industry” by offering customers more service, scheduling and pricing options and “will help ensure that they continue to benefit from having three competitive air alliances,” flies in the face of growing concerns at the Department of Justice and the DOT as well as with the House Committee on Transportation and Infrastructure and with the Senate Committee on Commerce, Science and Transportation.

Basically, because of the effective creation of an oligolopy through the formation of three main airline alliances, consumers are now getting less choice, higher prices, more difficult baggage transfers, uncertain service, confusing information on airline ticketing and a falloff in competition between not only the different alliances, but between the members of each alliance.

All of these improvements are rendered under the guise of more customer service facilitated by antitrust immunity, joint airline club memberships and lots of frequent flier miles spread among alliance partners to make passengers think they are getting a good deal.

Arnold, please take another look at these airline alliances and get on the side of the airline passengers and their pocketbooks. Terminate your airline support.

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  • http://yahoo.com t.j. fulkerson

    please:

    approve the one world alliance as soon as possible. the other alliances have a very big advantage over the one world. i live part time in europe and could fly out of tampa but i can’t get american miles. i can fly out of most other cities on the other alliances and get my usa airline miles and it is not wrong

    t.j.

  • Henry

    Are you really surprised a Republican Governor is supporting this request?

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