Air & Space
Alliances and Antitrust Immunity: Why Domestic Airline Competition Matters
The debate over competition in the U.S. airline industry in recent years has focused largely on developments in domestic airline markets, ranging from mergers, access to airports (e.g., slots), alleged anticompetitive coordination on airline capacity and ancillary fees, and concerns over deteriorating quality of air service. Airline competition in international markets, however, also raises concerns and merits scrutiny. Chief among these concerns is the U.S. Department of Transportation’s (DOT’s) policy of granting immunity from U.S. antitrust laws (ATI) for coordination on schedules and fares by members of the three large international airline alliances: Star Alliance, oneworld, and SkyTeam. A second issue of concern is barriers to entry by foreign carriers on international routes serving U.S. destinations. U.S. legacy carriers have opposed such entry while simultaneously expanding their stakes in foreign carriers, perhaps to gain control over decisions to enter U.S. markets.