EVER SINCE taking up the post of European transport commissioner, Neil Kinnock has been itching to take on responsibility for global air-traffic agreements between Europe and third countries. At last he appears to be making progress.
In June, Europe's air-transport ministers agreed to let Kinnock open talks with the USA, albeit on a preliminary basis and with howls of opposition from the UK. Now, Kinnock and his competition counterpart Karel van Miert have been given permission to open an investigation into the flurry of transatlantic alliances such as that recently consummated between Lufthansa and United Airlines, and the proposed tie-up between British Airways and American Airlines,
Kinnock and the EC appear to be moving in the right direction. If Europe is indeed to operate as a single air market, then it becomes a nonsense for competition issues, or for that matter those of air safety and infrastructure, to be dealt with at national level. The growing number of transatlantic alliances and "open-skies" agreements only serves to underline the fact.
It is no longer enough to look at an individual carrier in an individual market, but to consider the balance of the whole Europe/USA market, with many gateways on each side of the Atlantic. That function naturally belongs to Kinnock and van Miert, not to a national competition regulator, however competent.
BA dominates flights to the USA from the UK, Lufthansa traffic from Germany, and so on. That does not necessarily mean that any of these alliances has an unfair dominance of the transatlantic market.
A similar question must face the anti-trust regulators in the USA. Delta Airlines dominates flights out of Atlanta; United dominates flights from Washington. Is dominance of transatlantic services from one city tantamount to dominating the USA/Europe market? The answer surely must be that it is not.
The next question is whether dominance of a city pair, such as that of London/Washington or Paris/New York, is against the interest of the consumer. There is certainly greater cause for concern here, and greater legitimate grounds for interest by the regulators - but only if dominance means monopoly or near- monopoly. The real problem for the regulators is to calculate just how many airlines and alliances are really needed in the transatlantic market to preserve and promote consumer-friendly competition. The vast, but fairly unified, US market supports only half-a-dozen carriers with international credentials - and they seem to offer adequate, price-sensitive competition between them. Europe has dozens of carriers with international ambitions - far more than will ever be able to find US partners with which to strike profitable alliances.
On balance, given the small number of potential US partners available, no more than a dozen or so European airlines can be expected to strike up meaningful relationships with them. Making arrangements for dozens of European and US airlines to have access to a congested airport such as that at London Heathrow does not, therefore, make much sense, as few of them will ever have the marketing clout to be able to make a real impression.
That does not mean, however, that BA and American are being any more realistic in claiming that they should not have to yield up any of their Heathrow slots as a condition of alliance than are those such as Virgin in claiming that they have a right to those slots.
The decision is not about making room for the maximum number of airlines, but in ensuring that there remains a sufficient number of airlines of sufficient strength to keep the market truly competitive for the consumer. Kinnock has been making encouraging noises that he relishes this consumer-led approach. Let us hope that he now applies it.
Source: Flight International
