Anti-Trust Immunity, Airline Alliances & You

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08/04/2009 – Anti-Trust Immunity, Airline Alliances & You

I am sure that very few people ever give a second thought to anti-trust laws, international airlines alliance and how it could possibly affect them. If you are a frequent flyer, this issue does affect you, even if you do not realize it.

Yesterday the United States Department of Transportation (DOT) tentatively approved the anti-trust immunity application of Continental Airlines to join the pre-existing anti-trust immunity of United Airlines, Lufthansa, British Midland/BMI, SWISS, Air Canada, Austrian, SAS, LOT Polish and TAP Portugal. All of these airlines are members of the Star Alliance, an international airline alliance. With this temporary approval (which is not expected to be overturned) from the DOT Continental Airlines is free to join the Star Alliance this coming October, after it departs the Sky Team alliance.

Continental’s departure from SkyTeam reduces the number of United States based airlines that SkyTeam flyers can choose from. A year ago there were three airlines, now there is going to be one. With Delta & Northwest merging SkyTeam went from 3 airlines to two, with Continental departing it leaves one. Due to this change in SkyTeam’s partner airlines, the Star Alliance will move from two US based airlines, United Airlines and US Airways, to three airlines with the inclusion of Continental, thus giving Star Alliance a total of four airlines in North America, when Air Canada is factored into the equation.

The DOT’s allowance of anti-trust immunity has significant implications for the OneWorld airline alliance. American Airlines and British Airways have had a close alliance for years, and have previously applied for anti-trust immunity, only to be turned down. The original reason for denying anti-trust immunity to American Airlines and British Airways had been the landing slot allotment at London’s Heathrow International Airport (LHR). With the Open Skies Agreement allowing any US and European Union carrier to fly from any point-to-point within the United States and the Europen Union the issues of landing slots at LHR is now not a valid argument for denying anti-trust immunity between the airlines. This denial of anti-trust immunity between American Airlines and British Airways directly impacts their frequent flyers, as no code share flights are allowed over the Atlantic between the carriers, and members of their frequent flyer programs cannot accrue frequent flyer miles while traveling on the other carrier while flying on trans-Atlantic flights. This reduces travel options and limits the options for frequent flyers loyal to their frequent flyer program, seeking to fly within the OneWorld alliance.

As a frequent flyer this ruling by the DOT regarding anti-trust immunity may cause you to stop and survey the changing landscape of the industry.

If you are a Continental Airlines frequent flyer you may consider looking for a Star Alliance airline status match to avoid any potential temporary loss of benefits as the airline changes alliances when flying in Star Alliance carriers. While the transition may be smooth within Continental, there will certainly be some issues with other member carriers during the transition.

If you are a frequent flyer between North America and Europe with either American Airlines or British Airways your options may be expanding very soon. Along with American Airlines and British Airways, Iberia and Royal Jordanian will be seeking a worldwide anti-trust immunity pact. Once they are approves, and they should be, it may not be long before Qantas joins the anti-trust immunity agreement as well.

…if you are US Airways frequent flyer, a Star Alliance member, pay close attention to the airlines listed in the Star Alliance anti-trust immunity. Ten airlines are listed for worldwide anti-trust immunity; US Airways is not one of them. What does this mean for US Airways? I think only time will tell.

These changes in the international airline industry will have a direct impact on not only potential flights and routings, but on costs as well. Some shifts will work in the favour of flyers, others will work against flyers. Frequent flyers should begin exploring all the potential programs within the various alliances they travel with and seek out the one that has the most potential benefit for them, even if it means joining a program of a carrier other than the one they regularly fly on.

Happy Flying!

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