Why does SkyTeam put up with AZ undercutting it?
 

AZ is offering some unbelievable fares from TLV. (Not including tax):

NYC-Boston-Washington: $529
Chicago-Miami: $599
Toronto: $569
Rome-Milan: $309
Anywhere else in Europe: $349
Buenos Aires - Sao Paolo: $899
Tokyo/Osaka: $916

This covers the Passover period while airfares out of Israel are usually at their highest.

My question: Why does SkyTeam put up with this from a fellow member? It certainly is not going to help Continental or Delta (which are asking about $1200 for a flight to MIA) or AF/Czech Air (I don't have their prices but they are generally about $200 less than the Americans).

AZ has a constant record of undercutting every other airline's prices (at least from Israel) but I can't see why its partners don't tell it to bring up its prices or get out of SkyTeam.

Is it possible that other options to resolve such an "issue" would possiby involve illegal collusion/price-fixing in the mind of some regulatory/legal authorities?

I know that AZ definitely undercut the other SkyTeam members for DEL-LHR in business and coach. :)

It is possible -- but I don't know if saying "We will not be partners with someone who seriously undercuts our prices" amounts to price fixing.

Perhaps the rules to kick out members from SkyTeam -- or to set up a separate alliance without the "non grata" airline -- involve costs that are not materially insignificant; and thus to use the dollar price of fares on a given route as a qualifying factor for membership entry or membership maintenance might arouse interest from the anti-monopoloy/pro-competition crowd even before the alliance is set-up and even after it is operating.

^ :D

I don't know, maybe antitrust.

Read the transcript of a famous conversation between Robert Crandall (AA) and Howard Putnam (Braniff). (Scroll down to page 46.) This wasn't price fixing (because Putnam rebuffed Crandall's demands), but did get Crandall in a lot of hot water.