The Air Travel Fairness, a traveler advocacy group based in the United States, has urged the United States Department of Transportation (DOT) to rebuff any applications from airlines for either new or amended antitrust immunity (ATI) pacts between carriers.
The group said that protections must first be implemented to shield consumers from the damage these cartel-like schemes inflict.
Airlines with antitrust immunity are free to collaborate with each other on fares, schedules, fleets, marketing programs and operations.
For example, once given approval for antitrust immunity, two airlines that previously were in competition against each other, perhaps offering the only nonstop flights on a given route, behave as if they are one company.
The two airlines can share costs and earnings on flights, decide on prices which include minimum fares for each of their flights, lower capacity if too many low-priced seats are available, or remove the type of bonus and discount programs offered to frequent flyer program members when two or more airlines are competing for travelers’ business in a truly competitive market.
The consumer impact is just the same as when a market with two competitors make changes to create just one, without having changes in ownership.
“When airlines seek antitrust immunity from the U.S. government, they promise it will create more schedule options and smoother connections for travelers, but they fail to mention the high price the flying public ends up paying in reduced competition,” explained Kurt Ebenhoch, Executive Director of the Air Travel Fairness Coalition.
“U.S. airlines are now using their antitrust immunity to make it exceedingly difficult for travelers to compare schedules and ticket prices on flights operated by their international partners that were granted antitrust immunity by DOT, something never contemplated originally,” he added.
Research indicates market concentration leas to raised airfares for air travellers.
According to a study, the type of airline mergers, acquisitions, joint ventures and code-share agreements approved in America and between the U.S. and Europe, have added to a decline in competition, lesser choices and increased prices for travellers.
The study discovered that airlines and airline groups are vigorously directing consumers to their own websites where they evade comparisons in prices and competition.
The study also uncovered that a lot of carriers are resorting to this measure by making information less accessible to the independent and impartial distributors of airline tickets, which many consumers actually prefer when booking flights.
U.S. DOT is legally mandated to prevent anticompetitive practices in air transportation According to section 49 of the U.S. Code on Policy, the Secretary of Transportation is to “consider several matters of being in the public interest and consistent with public convenience and necessity,” among them:
“(7) developing and maintaining a sound regulatory system that is responsive to the needs of the public and in which decisions are reached promptly to make it easier to adapt the air transportation system to the present and future needs…”
“(9) preventing unfair, deceptive, predatory, or anticompetitive practices in air transportation.”
“(10) avoiding unreasonable industry concentration, excessive market domination, monopoly powers, and other conditions that would tend to allow at least one air carrier or foreign air carrier unreasonably to increase prices, reduce services, or exclude competition in air transportation.”
“(12) encouraging, developing, and maintaining an air transportation system relying on actual and potential competition—
(a) to provide efficiency, innovation, and low prices; and
(b) to decide on the variety and quality of, and determine prices for, air transportation services.”
(13) encouraging entry into air transportation markets by new and existing air carriers and the continued strengthening of small air carriers to ensure a more effective and competitive airline industry.”
(f) Strengthening Competition.— In selecting an air carrier to provide foreign air transportation from among competing applicants, the Secretary of Transportation shall consider, in addition to the matters specified in subsections (a) and (b) of this section, the strengthening of competition among air carriers operating in the United States to prevent unreasonable concentration in the air carrier industry.”