United and Air Canada, which have anti-trust immunity to coordinate schedules and pricing on transatlantic services, are considering doing the same thing between the U.S. and Canada.
Copyright: ronniechua / 123RF Stock Photo
Delta, fresh off approvals of joint ventures with Aeromexico (49% owned by the Atlanta-based airline) and Korean, and solidifying its transatlantic joint venture in a bizarre multi-party deal that involves equity stakes and board seats involving Air France KLM, Virgin Atlantic, and China Eastern now wants the governments of the US and Canada to offer it immunity from anti-trust laws to collude with Westjet.
Highlights of the planned joint venture arrangement, subject to board approvals, execution of definitive agreements and applicable regulatory approvals, in the United States and Canada, include:
- Coordinated flight schedules for new nonstop flights to new destinations, expanded codesharing, and seamless and convenient connections on the airlines’ extensive networks in the U.S. and Canada.
- Enhanced frequent flyer benefits including reciprocal benefits for top-tier members of both airlines.
Copyright: dennizn / 123RF Stock Photo
American and WestJet are currently partners and it’s a good bet that partnership would end with a Delta-Westjet joint venture. American is bleeding partnerships left and right losing Jet Airways, Alaska in all but name only, Gulf Air, and voluntarily relinquishing their reach into the Indian market by severing codeshares with Etihad and Qatar.
American Airlines just announced modest service increases to Canada.
- Resumes Chicago O’Hare – Calgary service for the summer with 6 weekly Embraer E175 flights
- Resumes Chicago O’Hare – Vancouver services effective May 4 with 1 daily flight
- Adds a daily New York LaGuardia – Toronto flight (going from 4 to 5 daily), upgauging two of the flights to Embraer 175s from ERJ140/145s.
- Adds a daily Philadelphia – Ottawa flight (going from 2 to 3 daily)
- Adds a Washington National – Toronto flight (going from 2 to 3 daily)
Nonetheless, the world’s largest airline would be more or less left behind in the US-Canadian transborder market. Once again they’re outfoxed by Delta.
I’m not a fan of the mess that is modern anti-trust law. The old saying goes that it’s almost impossible not to violate anti-trust. If your prices are too high, that proves monopoly pricing power. If your prices are too low, that’s anti-competitive dumping. And if your prices are the same as your competitors, that’s collusion.
Still there should be consistent standards applied to airlines, and not piecemeal exemptions. Last year American and Qantas were denied an expanded joint venture despite Delta and Virgin Australia having one and United and Air New Zealand having one.
Less competition shouldn’t always be illegal, but we shouldn’t pretend it’s good for consumers, something that the federal government is supposed to take into account today in deciding whether to grant anti-trust immunity to airline collusion. Neither the United-Air Canada nor Delta-Westjet deals should be approved. And existing deals should be regularly revisited to determine whether the promised consumer benefits have materialized.
Ultimately we need a new approach to anti-trust, but piecemeal exemptions that favor one company over another while going through the kabuki theater that is it’s all about benefits to passengers is simply bad policy.
(HT: One Mile at a Time)