Airline Axis of Evil
Feb 19, 2003, 9:08 pm
#1
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Airline Axis of Evil
Airline Axis of Evil
Opinion · January 24, 2003
http://www.elliott.org/vault/oped/2003/code.htm
The Continental-Delta-Northwest alliance basically allows the airlines to double-up on frequent-flier programs, facilities, and planes. The net effect is that you could buy a ticket on Continental but then actually fly on Delta. It means you could fly on Delta but collect your miles on Northwest. It means you could have a frequent-flier pass to get into Northwest's first-class lounge, but use it in Continental's airport lounge.
But that's not all. There are other "benefits" the airlines don't talk about. Together, the three carriers in question control more than a third of the domestic market, and the alliance as envisioned by the airlines effectively allows them to stop competing and start cooperating.
Opinion · January 24, 2003
http://www.elliott.org/vault/oped/2003/code.htm
The Continental-Delta-Northwest alliance basically allows the airlines to double-up on frequent-flier programs, facilities, and planes. The net effect is that you could buy a ticket on Continental but then actually fly on Delta. It means you could fly on Delta but collect your miles on Northwest. It means you could have a frequent-flier pass to get into Northwest's first-class lounge, but use it in Continental's airport lounge.
But that's not all. There are other "benefits" the airlines don't talk about. Together, the three carriers in question control more than a third of the domestic market, and the alliance as envisioned by the airlines effectively allows them to stop competing and start cooperating.
Feb 19, 2003, 9:28 pm
#2
Join Date: Sep 2002
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Just for the record, No one holds a gun to your head. Afterall it is the "Big Six", that leaves 3 other Hub & spoke carriers. 2 of which offer a very comprehensive route structure.
In order for their little plot to succeed you have to buy tickets. Don't do it and the Air Axis of Evil disappears.
Visit www.us-cockroach.com
In order for their little plot to succeed you have to buy tickets. Don't do it and the Air Axis of Evil disappears.
Visit www.us-cockroach.com
Feb 20, 2003, 9:44 am
#3
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There's arguments on both sides as to whether code-sharing increases or decreases competition. The area in question is typically access to hub airports by the non-hub carriers who are in the alliance. I don't know of any rigorous evidence proving one way or another.
In the area of economics concerned with the study of monopoly and oligopoly markets there is a saying that "4 is few and 6 are many." 6 players are enough to make a market very competitive, while 4 are too few and it becomes oligopolistic.
Depending on your interpretation of DL-CO-NW you coudl say that this turns those three entities into effectively one, thus reducing the 6 domestic majors to effectively 4. I am no fan of government regulation but I have a lot of reservations that this isn't going to help the flying public. OTOH neither will 1 or 2 of these airlines going Ch. 11.
-cwk.
In the area of economics concerned with the study of monopoly and oligopoly markets there is a saying that "4 is few and 6 are many." 6 players are enough to make a market very competitive, while 4 are too few and it becomes oligopolistic.
Depending on your interpretation of DL-CO-NW you coudl say that this turns those three entities into effectively one, thus reducing the 6 domestic majors to effectively 4. I am no fan of government regulation but I have a lot of reservations that this isn't going to help the flying public. OTOH neither will 1 or 2 of these airlines going Ch. 11.
-cwk.
Feb 20, 2003, 10:42 am
#4
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by mikey1003:
Airline Axis of Evil
Opinion · January 24, 2003
http://www.elliott.org/vault/oped/2003/code.htm
</font>
Airline Axis of Evil
Opinion · January 24, 2003
http://www.elliott.org/vault/oped/2003/code.htm
</font>
The Transportation Department shouldn't have approved this new code-sharing deal to begin with. It has no business sanctioning a de-facto monopoly in a free market. If it had bothered to look at other beleaguered industries in the past - autos, steel, telecommunication - it would have noticed that less government intervention, not more, saved the day. By allowing the nation's third-largest, fourth-largest and fifth-largest airlines to join forces, it is actually hurting the very group it is supposed to protect: the airline passenger.
****
OK so I'm confused. Is the author arguing for less or more intervention. *Less* intervention would be letting the airlines do what they want - right ?
Feb 20, 2003, 11:20 am
#5
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Despite "deregulation" the airlines are still constrained in their freedom to provide and market services by an intricate web of regulations, consent decrees, etc.
Many of these are targeted specifically to try to prevent price-fixing. Code-sharing can have the effect of improving levels of service (a public Good) but are widely thought to promote price collusion (a public Bad).
Thus, to conduct code-sharing activities, the alliance must be approved by a web of agencies, primarily DOJ and DOT.
"Government non-intervention" would mean many things. It would mean allowing airlines to form any and all alliances desired with any conditions, including allowing price-fixing schemes.
However, it would probably also mean more airports being open to LCCs et. al. Right now airlines can play a lot of governmental games (at fed'l, state, and local levels) to keep SW/AT/JB out. It would also mean no federal loan guarantees or any other special treatment to protect businesses that can't survive on their own two feet.
What the airlines (like all businesses) want is not to get rid of gov't involvement, but to get gov't involvement on their side.
-cwk.
Many of these are targeted specifically to try to prevent price-fixing. Code-sharing can have the effect of improving levels of service (a public Good) but are widely thought to promote price collusion (a public Bad).
Thus, to conduct code-sharing activities, the alliance must be approved by a web of agencies, primarily DOJ and DOT.
"Government non-intervention" would mean many things. It would mean allowing airlines to form any and all alliances desired with any conditions, including allowing price-fixing schemes.
However, it would probably also mean more airports being open to LCCs et. al. Right now airlines can play a lot of governmental games (at fed'l, state, and local levels) to keep SW/AT/JB out. It would also mean no federal loan guarantees or any other special treatment to protect businesses that can't survive on their own two feet.
What the airlines (like all businesses) want is not to get rid of gov't involvement, but to get gov't involvement on their side.
-cwk.
Feb 20, 2003, 11:33 am
#6
Join Date: Aug 2000
Posts: 1,739
Does code-sharing really improve levels of service much more than the old system of widespread interline ticketing?