Monday, September 14, 2009

On "Ties in the Sky"

Earlier this week, the Financial Times published an in-depth story on the history, development, and current state of the international airline alliance system.  See Aviation: Ties in the Sky, Fin. Times, Sept. 9, 2009 (available here).  The story also comes with an online interactive feature which allows users to explore the three major alliances: SkyTeam, Star, and oneworld.  See here.

The article deserves attention, not least because it provides a concise iteration of the relevant legal and political conditions which have made alliances both possible and necessary.  The linking of U.S. antitrust immunity with open skies bilateral agreements is an aerodiplomatic/aerolegal fact oftentimes passed over in the ever-growing popular literature on why these transnational joint ventures could be problematic.  (For whom? Consumers?  Regulators?  Competitors unable to develop an alliance network of their own?  These categories are often compacted by those who condemn these link-ups.)  Without the bait of antitrust immunity, it is unlikely that the U.S. could have "lured" many important partners to accept the liberal trade provisions of open skies.  As both American and United Airlines pointed out during the recently concluded Star Alliance immunity application proceeding before the Department of Transportation, there are still many aviation trading partners with which the U.S. has no open skies treaty.  These include China, Japan, Russia, and Brazil.  What are the chances that these global players will sing-on to open skies without the same coin of exchange U.S. partners Australia, Canada, and the European Community have received?  

The airline industry is in turbulent times.  No one denies this, just as no one concerned with air transport being allowed to operate as a truly globalized industry denies that it continues to labor under a suboptimal international regulatory schema.  As the Financial Times properly points out, this schema forecloses alliance partners such as British Airways and American Airlines from truly rationalizing their costs and consummating a transborder merger.  For dubious reasons rooted in national pride, misplaced security concerns, protectionism, and other causes, airlines remain "exceptional," that is, they remain subject to outmoded mercantallist mindset.

The airlines, through a mix of entrepreneurial ingenuity and commercial necessity, have forged comprehensive global route networks through the alliance system.  They have moved ever closer toward providing global brands--SkyTeam, Star, and oneworld--which are available to almost any one, in any place, and at any time.  Though still in its tender years, the alliance system is rapidly providing aviation's version of McDonalds, Burger King, and Starbucks: service providers with undeniable international recognition.  Is this not what a globalized world enables?  That one can be in any city in the world and know that the type of product and service they demand is there?  Why is this acceptable for fast food and coffee and not air transport services?

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