Will Consider Competitive Implications
In
what could be the first, tentative step towards the loosening of
current restrictions on cross-border airline alliances -- or, even
greater government involvement in such actions -- on Tuesday the US
Department of Transportation (DOT) and the European Commission
launched a new joint research project aimed at "deepening their
understanding of how alliances have affected competition in
transatlantic markets."
As ANN has reported, the
US-EU Air Transport Agreement -- more commonly known as "Open
Skies" -- goes into effect at the end of March, and will for the
first time allow EU and US airlines to serve any route between
Europe and the United States. A corollary of the deal calls for
both sides to develop a common understanding of trends in the
airline industry, in order to promote common approaches on
competition issues.
Many airlines are part of global codesharing alliances -- such
as Skyteam, Star Alliance, or OneWorld -- which allow carriers to
sell seats on competitors' flights within the network, and pool
staffing resources. Such alliances came to pass due in part to
restrictions on cross-border airline mergers and investments.
During the upcoming meeting, the Commission and DOT will
interview airlines, travel agents, industry analysts, and consumer
groups, as well as perform quantitative analysis on air traffic
data, to determine whether such alliances limit competition on
codeshared routes.
"The research project will ultimately enable the Commission and
DOT to develop a common understanding of competition in
trans-Atlantic markets and to inform public discussions of the
future of air transportation," according to the DOT release.
There's potential for a larger
precedent to be set, as well. Should the EU and US find competition
is limited by alliances, it could lead to greater restrictions on
any cross-border agreements between airlines. That could have
ramifications for current and future foreign investment in US
carriers.
For example, upstart US low-cost carrier Virgin America is
partly owned by Britain's Virgin Group; Germany's Lufthansa has
already acquired a minority stake in JetBlue, a move some believe
could result in a takeover if conditions are right; and Air
France/KLM has expressed interest in greasing the wheels
financially, should a Delta/Northwest merger go through.
Conversely, if the US and DOT give their blessing to continued
alliances... it could lead to eased regulations capping the limit
of foreign investment in US carriers.
In any case, the process to evaluate the implications of
alliances won't happen quickly. A final report summarizing the main
findings of the research will be published in mid-2009.