DOT and European Commission to Conduct Joint Study of Airline Alliances

DOT and European Commission issued simultaneous press releases Tuesday announcing a joint study of the the competitive impact of Airline alliances. This is great news because the anti-competitive nature of airline alliances is well known -- otherwise, why would airlines have had to ask for antitrust immunity. Under immunized agreements, carrier such as Delta and Air France, or United and Lufthansa, agree on prices and schedules that they will operate on major transatlantic routes. DOT approved such agreements under the theory that the joint monopoly to major gateways would be disciplined by the effect of competition on other routes to Europe. There never was any proof to support this claim, and it is encouraging that regulatory agencies on both sides of the Atlantic will now examine the results.

The EC press release summarized the goals of the study as follows:

The European Commission and U.S. Department of Transportation (DOT) have launched joint research aimed at deepening their understanding of transatlantic air services. The research will explore the robust growth of airline alliances, the effect of alliances on airline competition, and possible changes in the role of alliances following the EU-US Air Transport Agreement. A final report summarising the main findings of the research will be published in mid-2009.

The wheels of the agencies grind slowly, but consumers can hope that they will ultimately result in increased competition on the Atlantic.