Airline axis of evil

What if the pilot on your next flight suddenly decided to stop following directions from the control tower? You wouldn’t feel safe, would you?

But wait – isn’t that what three airlines did last week, so to speak? In announcing that they would defy the Transportation Department’s restrictions on a new alliance between Continental Airlines, Delta Air Lines and Northwest Airlines, the threesome have essentially told the metaphorical control tower to stick it.

At issue is a code-sharing deal between the carriers. Code-what? Well, that’s part of the problem: Few people outside the airline industry understand code-sharing, which may make it much easier for the airlines to get away with their lawless behavior. But it’s not hard to understand the consequences of letting this one slide. The code-sharing deal is nothing more than a precursor to a three-way airline merger. Fewer carriers mean less competition, and ultimately, higher prices.

The Continental-Delta-Northwest alliance basically allows the airlines to double-up on frequent-flier programs, facilities, and planes. The net effect is that you could buy a ticket on Continental but then actually fly on Delta. It means you could fly on Delta but collect your miles on Northwest. It means you could have a frequent-flier pass to get into Northwest’s first-class lounge, but use it in Continental’s airport lounge.

But that’s not all. There are other “benefits” the airlines don’t talk about. Together, the three carriers in question control more than a third of the domestic market, and the alliance as envisioned by the airlines effectively allows them to stop competing and start cooperating.

A new Continental-Delta-Northwest would control a vast network capable of crushing any start-up airline in its markets. Which is exactly why the government imposed strict limits on the code-sharing deal. For example, the airlines would have to give up underutilized gates if they’re asked to, possibly freeing them up for new airlines instead of hoarding them. And another condition is that 60 percent of the new code-share flights would have to benefit underserved routes.

Most observers seem oblivious of the danger in these carriers’ defiance. To date, the only major trade organization to back the government is the National Business Travel Association. Its president, Kevin Iwamoto, last week urged the Transportation Department to continue monitoring the alliance partners to “ensure that consumers will not be subject to anticompetitive pricing or tactics and that this new alliance will not hurt low-fare, new-entrant carriers.”

He didn’t mention the likelihood that the Big Six carriers will soon become the Final Four. He didn’t have to. United Airlines and US Airways are in bankruptcy and American Airlines, which just suffered a yearly loss of more than $3 billion, is rumored to be on the verge of filing for bankruptcy protection. It’s only a matter of time before another big airline goes belly-up.

The Transportation Department shouldn’t have approved this new code-sharing deal to begin with. It has no business sanctioning a de-facto monopoly in a free market. If it had bothered to look at other beleaguered industries in the past – autos, steel, telecommunication – it would have noticed that less government intervention, not more, saved the day. By allowing the nation’s third-largest, fourth-largest and fifth-largest airlines to join forces, it is actually hurting the very group it is supposed to protect: the airline passenger.

The government has no choice but to rein in Continental, Delta and Northwest. Now that these renegade airlines have stopped taking directions from the control tower, there’s no telling where this plane is flying.

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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