Contracts are generally based on specific market pairs – JFK-LHR for example. If BA and AA, which currently operate 64% of all available service on that lane, are permitted to coordinate schedules, pricing and sales strategy, then here’s what will happen:

1. In the process of negotiating corporate BA and AA will jointly set high share requirements in return for the concessions that they will make to their corporate buyers. Buyers with a high need for inventory on that lane will agree to the coordinated share requirement and reduce their spend on other airlines, because they will have few other options.

2. Other airlines will redeploy their aircraft from the JFK-LHR market to markets where they believe they might leverage their market dominance to gain increase share from their corporate customers.

3. BA and AA will seek to increase prices, initially in their published fares and later in the much harder-nosed negotiations with their corporate customers, based on their dominance in the market JFK-LHR. Other airlines will also increase their prices in markets where they dominate – for example, STAR Alliance from SFO to just about anywhere in Asia etc.

The result: two carriers from NYC-LHR, protected by a special, government-sponsored antitrust exemption. Just like the good old days, pre-deregulation. I am just not sure how that’s a good thing for consumers.

Airlines are not cash machines. They used to be more like cash machines than they are now: your ticket on one airline was good on any airline or combination of airlines traveling between two points. That is certainly not the case now, so I am not sure I get your analogy.

I’m a fan of having lots of competition. All things being equal, competition generally means better goods and services for the consumers at the best possible price.

However, we cannot a priori make the statement that cooperation between competitors automatically means less competition, particularly when there is no dominant player in the market place

For example, in banking, I can withdraw money from nearly any ATM machine. . Similiarly, I can deposit money in any credit union ATM that’s part of the Co-op Network. That’s a form of constructive alliance. Consumers reap the benefit of having access to an enhanced network yet few would argue thats such agreements reduce competition.

I am skeptical that we will see less competition merely as a result of sharing information. However the jury is still out until we get a detailed factual analysis, e.g. what information is being shared, how will it be used, who will it be shared with, etc.

In short, antitrust protection is bad for customers in general. Airline customers have a miserable enough life. They don’t need more government-backed insults.

Please note that the airline industry is asking *for regulation* here. That should make everybody suspicious.

I understand your point but I don’t think its applicable here. In both Star Alliance and OneWorld, you have one or two major US carriers and the rest are foreign carriers. While I haven’t done an extensive analysis, my suspicion is that your average small US airport doesn’t have a strong international presence.

Antitrust immunity allows these alliances to create virtual monopolies on smaller airports. Traveling from London to Rome gives you plenty of options, just as traveling from NY to LA. However, try getting from Liverpool to Pisa, or Richmond VA to Des Moines IA. Suddenly your options are *very* limited.

While I can see little good in antitrust immunity in general, I certainly don’t see how it would be good for customers on smaller routes.

I will admit to skepticism in this matter. Airlines prices are easily obtained by consumers let alone insiders, so I don’t see how this will lead to higher prices. But, the devil is in the details.

What we can glean from this article is that travel agents believe that they will be the losers in this arrangement. Consequently, they trott out the big bogeyman of business. The “M” word; Monopoly.

With the increasing popularity of the internet and the free flow of information, many travel agents and agencies have seen their revenues diminish and see their industry under attack. This industry has been attacked by several commentators as being irrelevant. This leads to a certain knee jerk reaction. A couple years ago I read an article in which a travel agency owner was pitching the importance of travel agencies and that the advice they give should be considered as important as medical or legal advice. How sad.

Leaving aside the travel agencies for a moment, knowing that they havea beef with airlines and are hardly objective, the question is, have you been hepled or hurt by these alliances.

Speaking anecdotaly; I am a member of American Airlines. On a recent international trip, I stopped at the British airways lounge in several European cities, and used 40K AA miles to fly business class from Heathrow to Rome and back. on BA. If anything I wish the integration was more seamless as a ticket I purchased on BA.com didn’t have my AA information which caused a few minor hiccups.