27 March 2010

Alliances - Good or Bad. DoT vs DoJ Debates

I am not a strong advocate of cartels and oligopolies - they do distort competition and harm the consumers.

I also don't buy the big is always beautiful argument. Small and Nimble are things I admire.

I was very interested to read the Editorial Piece "Taking Sides" in Travel Weekly analyzing the DoT vs DoJ argument on Alliances and the new inner Alliances of the big 3 players mostly on the Transatlantic and now coming to the Transpacific.

In the current versions of the US House of Representatives bill on the FAA Authorization for 2010 and 2011 - there is a provision to sunset these agreements within 3 years. The Senate's version does not agree and this more radical provision has been left out.

I do believe that there is a strong sense of empathy from both Houses for the consumer protection. With the airlines clearly on the mend and fares rising, the sense of worrying about the health of the airlines is waning and the greater focus on main street and the downtrodden consumer will see the DoJ Consumer Protection view be the ascendant one. Will the Senate version prevail will be an interesting debate?

At this time - I would put it at even money. Come April when the bills head for conference - much will depend on the current economic climate and the anti-big establishment sentiment that seems to be rising in Congress.


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