US insists tie-ups benefit consumers

Date: 24/02/2000

By Renée Cordes

WHEN US department of transport officials travelled to Brussels for a meeting with Competition Commissioner Mario Monti and his team earlier this month, they did not come to argue on behalf of any particular carrier seeking the EU executive's blessing. Instead, they did their utmost to sell the idea of alliances in general.

They pointed to a recent study by the department which concluded that multinational alliances provided improved, more competitive services in scores of markets - not just in cities which had previously suffered from poor services but also by providing alternatives on routes which previously benefited from top-quality service provided by a single carrier.

However, the report did not assert all alliances were de facto pro-competition, warning that each tie-up must be examined on a case-by-case basis.

The study, which was unveiled last December, noted that airlines which had been given anti-trust immunity benefited from a significant increase in traffic. It argued that this did not result from the carriers involved 'stealing' market share from their rivals, but rather from an increase in overall traffic. In support of this, it pointed out that all three major alliances which have received clearance from Washington - led by Lufthansa/United, Delta and Northwest - experienced strong growth at the same time, suggesting that a large portion of this came from entirely new traffic.

Researchers also concluded that such alliances benefit consumers, arguing that they had resulted in a substantial decrease in fares in the past few years.

When US Department of Transport officials travelled to Brussels for a meeting with Competition Commissioner Mario Monti and his team recently, they did not come to argue on behalf of any particular carrier seeking the EU executive's blessing. Instead, they did their utmost to sell the idea of alliances in general.