An interesting dynamic has emerged in Congress with discussions about airline alliances, The House Transportation and Infrastructure Committee is staunchly against such antitrust immunity and the Senate Commerce Science, & Transportation Committee is strongly in favor of these arrangements.
Rep. James Oberstar, Chairman of the House Transportation and Infrastructure Committee, has been relentless in his disapproval of the growing antitrust immunity being granted to airline alliances. He has been supported by the Department of Justice and the Senate Judiciary Committee. The current FAA reauthorization bill as marked up in the House committee includes a tough anti-antitrust element that would force a study of consumer effects of the current system and then allow a resubmission of requests for antitrust immunity based on the results of the study.
The Senate version of the FAA Reauthorization legislation has no such limitations on airline alliances and antitrust immunity. In fact, both the Commerce Science, & Transportation Committee chairman, Sen. Jay Rockefeller, and the ranking member, Sen. Kay Bailey Hutchison, are firm supporters of the Department of Transportation (DOT) point of view. They are clearly irritated at usurpation of DOT perogatives by the Department of Justice (DOJ), which just released a report recommending against the approval of the antitrust immunity provisions between Continental Airlines and United Airlines through the Star Alliance.
Both camps are aggressively fighting for their point of view. Rep. Oberstar recently sent a letter to President Obama to urge his support for limited antitrust immunity for airlines. This, after the DOT approved antitrust immunity protection to Continental and United in the Star Alliance over the objections of the DOJ.
In the Senate Commerce Science, & Transportation Committee, Chairman, Sen. Jay Rockefeller, and the ranking member, Sen. Kay Bailey Hutchison, both attempted to extract promises of more antitrust immunity for airlines during the confirmation hearings last Wednesday of Susan Kurland as the nominee for Assistant Secretary of Aviation and International Affairs. Both the chairman and the ranking member pressured the nominee to state that she thought the pro-antitrust-immunity DOT position was correct in spite of the DOJ’s misgivings.
Clearly the Senate and House visions of airline antitrust immunity are on a collision course. The House feels it is putting consumers first by encouraging more competition. The Senate approach, in the words of Sen. Kay Bailey Hutchison, is “the more airlines we keep whole, the better off consumers are.”
Anyone who has read my columns about airline alliances in the past, knows that I feel these alliances are great for the airlines but do very little for passengers. Worse, the new international integration of airlines into virtual merged airlines with single governing boards and carefully planned routes is not good for consumers in the long run.
Recently, large independent international airlines and consumer traveler groups are lining up behind Rep. Oberstar and his point of view.
Virgin Atantic has for years been fighting the approval of a BA/American/Iberia antitrust pact. Now Dubai-based Emirates Airline is recognizing the new powers of the big airline alliances armed with antitrust immunity for international operations. Their initial complaints are being sent to the European Commission were hearings are in process about the extent of the Star and the OneWorld airline alliances
The senior vice president at Dubai-based Emirates said, “From cooperative frameworks, alliances have today become sophisticated, interwoven, often immunised vehicles with enormous market power,” he said in an interview. “The consequences of changing alliances are not fully considered. I would encourage policyholders to look deeply into this.”
The Consumer Travel Alliance has been actively engaged in a letter-writing campaign urging a new look at the elimination of competition that the current airline alliance system is empowering. This consumer organization notes that almost all of the evidence shows that these alliances work strongly in favor of the airlines and their bottom lines. Unfortunately, the same can’t be said of the benefits for consumers, the traveling public.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
