SAVE COMPETITION IN AMERICA'S SKIES
Do domestic airline alliances make any sense? For some years, U.S. carriers have been forming alliances with overseas carriers, an innocuous enough move that extends service and routes for customers who may be traveling outside the U.S. But the rationale for the three domestic alliances in the works now--between American Airlines and US Airways, Continental Airlines and Northwest Airlines, and Delta Air Lines and United Airlines--seems flimsy (page 32). Advocates say it will lead to more seamless travel, better connections, and broader use of frequent-flier miles. Labor, consumers, and smaller airlines see it another way: The big guys are getting bigger without even having to merge financially, and they'll cut costs, raise prices, and cut routes in the process.
Critics are probably imputing greater organizational skills to the airlines than they actually possess. After all, partners in the international alliances seem to shift regularly. Still, it's worthwhile for the Justice Dept. and the Transportation Dept. to take a hard look at these proposed arrangements. Airline ticket prices rose at a 37% annual rate in the first quarter. Washington needs to ensure that the airlines don't become a cartel.