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Wednesday, Sep 27, 2023


Airline Alliances Benefit Everybody While airline alliances have faced intense government scrutiny from regulators claiming to protect the consumer, the flying public stands to benefit significantly from these arrangements. Air traffic demand is high and rising, so the government should continue to let the market decide what industry practices are competitive and fair. The U.S. air transport market has benefited considerably over the past two decades because policymakers have largely left its day-to-day operations alone. Like many deregulated industries, airlines have weathered many storms while adjusting to free-market competition including mergers, severe financial losses and even bankruptcies. Today, passenger numbers are growing steadily and orders for new aircraft, both as fleet replacements and additions, are at high levels. In fact, the current interest of the major carriers to form alliances reflects a maturing of the market. The success of international alliances, which offer seamless air services for international travelers, stimulated U.S. airlines to seek more effective domestic partnerships. Though the proposed alliances between United and Delta, Northwest and Continental and American and US Airways are not uniform, they all reflect a desire on the part of the carriers to develop integrated, nationwide networks to increase competition and better serve customer needs. Why then is the government considering blocking the Delta-United alliance? The government fears violation of antitrust standards. Yes, airlines should be subject to the same antitrust standards as any American industry. However, the Delta-United partnership does not violate those standards. It overtly avoids price-setting, an activity that is illegal, and is neither a merger nor a consolidation of services. The proposed Delta-United alliance is simple. It provides the ability for consumers to use a single carrier to reach anywhere in the country or the world without the extra cost and hassle of dealing with separate airlines. It allows each airline to sell empty seats on the other airline’s planes. Moreover, because the two airlines’ route systems do not overlap, each airline gains a presence in markets it does not currently serve. ROBERT F. RIPLEY Professor in aviation management Auburn University

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