Airline Alliances: Benefit or Plague?
You hear a lot about alliances among the world's giant airlines these days. To hear them tell it, those alliances provide improved "seamless" service throughout the world and are a great benefit for consumers. Many industry financial analysts claim that they're necessary for the older "legacy" lines to survive in a world increasingly driven by low-cost competitors. And consumer advocates say they're thinly disguised attempts to stifle competition and hike prices. Who's right? In my view, all of them are partly right.
What are airline alliances? Alliances among airlines are agreements to provide and coordinate a range of mutual support functions. In many ways, they're the only way large airlines can combine at least some of their services across national boundaries. In most large industries, mergers among companies based in different countries are commonplace, but national laws in
Who are they? Three big alliances dominate the current scene -- and I don't expect to see any new ones anytime soon:
-- SkyTeam includes Delta,
So far, the alliances have done a pretty good job of mutual frequent flyer and elite status recognition, although it's not perfect -- you still find plenty of cases where if you're on a cheap ticket you earn no miles on a "partner" flight. And according to press reports, they still may favor their own members over partner members for frequent flyer seat allocations, upgrades, and such. They've coordinated many schedules for worldwide connecting itineraries. They code-share many flights but by no means all flights or among all members. Each alliance is trying to group all members into a single terminal at such big, decentralized airports as
They have not yet made any meaningful attempt to standardize product. That means, for example, that
Normally, collusion on pricing between two independent companies violates antitrust laws in the US and equivalent laws elsewhere. Only a few alliance partner-line pairs, including Delta/KLM/
The bottom line: Airline alliances have a long way to go to provide genuinely "seamless" worldwide service. So far, nobody has yet shown that alliances lead to higher fares, but that could still come. One thing sure: Alliances have done nothing to improve the almost-universally-lousy product in economy class. And I don't expect that to change any time soon.
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