[FONT size=5][FONT size=2]Editorial from USA Today (1/27/03):[/FONT][BR][/FONT][FONT size=3][STRONG][BR]As more airlines join forces threats to consumers grow[!-- End HeadLine --] [/STRONG][/FONT]
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[P][!-- Begin Story --]When three of the nation's largest airlines announced plans to form an alliance last August, the deal raised concerns for consumers. Delta, Northwest and Continental claimed the ''code-sharing'' agreement would benefit passengers by combining frequent-flier programs, expanding access to airport lounges and simplifying bookings on each other's connecting flights. But coming at a time when the industry is desperate to stanch hemorrhaging losses, the arrangement also threatened to result in fewer flights and higher ticket prices.
[P]Indeed, the alliance's potential to stifle competition prompted the Department of Transportation (DOT) last week to threaten legal action blocking the airlines from joining forces unless they ensure that fliers don't bear the brunt of the cost-saving move. Yet in an extraordinary dismissal of a federal agency, the airlines brazenly declared that they would go ahead and launch their partnership this summer.
[P]The trio felt emboldened to thumb their noses at the DOT because another federal regulator, the Justice Department, already had given the airlines a pass to form their alliance with a few minor changes. Had both government watchdogs barked in unison, they might have forced the airlines to refashion the deal.
[P]The DOT has potent objections. While the alliance offers fliers some benefits, the agency concluded that the airlines' combined dominance, a third of all air travel, could monopolize many markets. Among its worries:
[P]* Route dominance. The alliance would be so dominant in some places that competitors could be forced to give up routes. When an airport is dominated by one airline and lacks a low-fare competitor, prices often go up, according to a 2001 DOT study.
[P]* Collusion. Implementing the alliance requires extensive negotiations that could give the airlines opportunities to make secret deals to raise prices and cut service. That would deny consumers the benefits of the current no-holds-barred rivalry.
[P]* Overblown promises. The three airlines vow that the alliance will bring ''seamless service to thousands of new markets.'' But the fact that they currently offer overlapping service on more than 3,200 routes raises questions about how many new destinations remain untapped. The carriers say a passenger who has to purchase two tickets to reach a destination would be able to arrange connecting flights on a single ticket in the future. The DOT estimates such ease of booking would occur for just 89,000 passengers a year -- a fraction of the 600 million who fly annually in the USA.
[P]To address its concerns, the DOT asked the airlines to give up underused gates in a move that could spur competition. The airlines agreed to surrender only 13 gates among scores that may be underutilized at hub airports, airlines' connecting-flight centers. They also balked at permanently limiting shared connecting flights and joint bids for corporate travel.
[P]Justice officials, by contrast, ruled that their antitrust concerns were mollified by minor concessions, such as the airlines' promise not to extend their alliance to flights from hubs. By failing to weigh in with one voice against the alliance, the government presents a weak case for forcing more needed changes in the alliance.
[P]That's a missed opportunity for preserving airline competition and, ultimately, protecting consumers.[TODAYS_TOPIC]Today's debate: Airline competition[/TODAYS_TOPIC][OUR_VIEW]Mixed signals from agencies lead to move that could hurt fliers.[/OUR_VIEW] [!-- End Story --][!-- END DATA --][!-- End Sandbox --][/P]
