Air Transport World

Some call it oligopoly; regulators are asking questions about code-sharing alliances and their effect on competition, especially on the North Atlantic.

Regulators are asking questions about code-sharing alliances and their effect on competition, especially on the North Atlantic

Airlines have convinced bureaucrats in Washington and Brussels that code sharing, which has reached epidemic proportions on the North Atlantic, is the best way to break down national boundaries and let airlines become real businesses. Best, at least, until airline-ownership laws change.

But regulators still have concerns about it. Indeed, even as they accept arguments that "system competition" through code-sharing alliances is a must, the regulators are considering whether to control them more closely. The fact that four U.S.-linked groups have more than 63% of the entire North Atlantic market--the Delta plus Swissair, Austrian and Sabena, plus Delta and Virgin, has 22.3%, United/Lufthansa 15.6%, USAir/BA 15.3% and KLM/Northwest 13%--has occupied DOT's policy makers for months.

Of the four combines, only Northwest/KLM has antitrust immunity, which permits almost unlimited cooperative action. BA/USAir has not sought such immunity but the other two combinations have and are awaiting approval. Delta is seeking immunity for itself and three partners: Swissair, Sabena and Austrian.

But the competitive overlap between Delta and Co. is particularly extensive. A non-DOT government staffer says: "There are 10 routes of particular concern." What DOT will do about it is another matter. Assistant Secretary for Aviation and International Affairs Charles Hunnicutt emphasizes a less-threatening-sounding aspect of the North Atlantic.

With the German open-skies deal, he said in March, "nearly 40% of the passenger traffic between the U.S. and Europe will be traveling under open-skies arrangements." Nevertheless, the unconditional immunity given KLM/Northwest in 1992 will not be repeated. …

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