Posts Tagged ‘International Airline Mergers’
The Resolution in brief
Citing the erosion of airline competition on international routes, House Transportation and Infrastructure Chairman James L. Oberstar of the 8th District of Minnesota has introduced a bill to study the effects airline alliances and anti-trust immunity have on consumer choice.
The bill, H.R. 831, was introduced late Tuesday session of the US Transportation Aviation Subcommittee, and was formally released today.
While the Resolution does appear to outwardly address issues around consumer protection, our analysis of the text shows a more disturbing trend toward questioning the role of the Secretary of Transportation and the Department of Justice in the review, approval, and interpretation of U.S. existing anti-trust law in a single industrial area.
Why the Resolution is not required
While we agree that the legislative and judicial branches should have a common set of laws to work from, the fact of the matter is that they already do. These laws have kept in balance the needs of consumers and the airlines and other industries, with a few notable exceptions. One of the most notable exceptions was the failure in 2002 of the American Airline (AA) and British Airways (BA) antitrust immunity. At the time, this decision was based on restrictions at London’s Heathrow Airport which have since been lifted and trans-Atlantic competition at Heathrow has flourished even in a weakening market.
The other potentially damaging issue with this new Resolution is its impact on the US-EU Open Skies agreement that paved the way to opening up London Heathrow, as well as other key trans-Atlantic markets. We would call on both the Chairman and the Committee to explain the potential impact of this resolution on the Open Skies agreement.
This resolution could hurt airline consumers and constituents alike
While we applaud the House Resolutions wish to protect consumers, we see it as simply a misguided attempt to redefine the power and scope of the U.S. Department of Transportation, and also needlessly attempt to block needed industry consolidation.
After fully examining Chairman Oberstar’s voting record and public comments, it has become clear to us that he feels that his constituents and the U.S. worker on whole needs protection from globalisation. This is not unlike the same issues that Prime Minister Gordon Brown faces here in the U.K. with regard to the recent wildcat strikes protesting the use of “overseas’ labour- even when that labour is simply part of the EU’s “Freedom of Movement” guarantee that we are all able to avail ourselves of.
What should we be focused on?
At TWC we feel that the US and EU government’s top priority should be an open trans-Atlantic aviation area that would allow the reciprocal removal of limits on the ownership of airlines by EU and U.S. investors and also give European carriers rights to fly passengers and cargo between U.S. destinations, known as the right of cabotage. We also feel that the US and EU must work out formal agreements on these key issues before extending the agreements to other third-party nations.
We should also keep in mind that consolidation is essentially better than a single airlines failure, and all of the local and national economic consequences of such a failure. Surely, it is in all of our interest to allow airlines to consolidate in a manner that allows them to remain strong, viable, and competitive employers.