Heads Up on Airline Deal
Consumers understandably are focused on how United Airlines’ high-profile bankruptcy could throw a monkey wrench into their travel plans. But travelers also should pay attention to a proposed marketing deal that is working its way through a Transportation Department review.
Why does a marketing deal matter to the flying public? Because the agreement proposed by Delta Air Lines, Northwest Airlines and Continental Airlines could dramatically reshape the passenger airline industry -- but not necessarily in a manner that serves passengers’ long-term interests.
On its face, the marketing agreement seems to be consumer-friendly. Travelers could accumulate frequent-flier mileage across the three carriers and enjoy access to more airport lounges and flights. But smaller airlines -- Southwest Airlines, JetBlue Airways, America West Airlines and others that have sparked competition in the industry -- say the deal would make it nearly impossible for them to break into parts of the country where the marketing consortium would dominate.
A recent Department of Transportation review of a narrower marketing plan proposed by United and US Airways Group suggests that smaller competitors have reason to worry. The agreement cleared an informal DOT review but regulators expressed “a number of concerns” because the two struggling airlines control almost a quarter of all airline passenger traffic.
Delta, Northwest and Continental already carry more than a third of all passengers and will scramble to make gains as United and US Airways shrink to reduce losses. If approved, the marketing deal would lead to an airline industry dominated by three powerful forces--American Airlines, the United/US Airways team and the Delta/Northwest/Continental marketing consortium.
Consumers benefit from competition, however. The very existence of Southwest, JetBlue and other smaller players forces big airlines to justify fare structures, improve service and respond more quickly to consumer demand. So regulators must move cautiously in determining whether the marketing plan will lead to anti-competitive behavior.
It’s worrisome that the Transportation Department is conducting an informal review of a significant plan that could reshape U.S. travel choices. The department should extend its review beyond its Dec. 21 deadline. And in addition to being thorough, the review should be formal.
Given what air travelers have had to put up with in recent years, it’s only right that a decision that may affect millions of them not receive the fly-by-night treatment.
