Thursday, March 7, 2013
LATAM Airlines Group, the new entity formed from the merger of South American carriers LAN and TAM, announced that it will belong to the oneworld alliance beginning in 2014. Prior to the merger LAN had been a member of oneworld and TAM a member of the Star Alliance. Chile's competition regulators made withdrawal from one of the two alliances a condition for approval of the merger. The decision to join oneworld isn't a surprise, given LAN's deeper and longer-standing ties to oneworld than those between TAM and the Star Alliance, which TAM had only recently joined. The predictability of the result doesn't make it any less consequential as a move to the Star Alliance would have left oneworld struggling for market share in the Latin American market while simultaneously placing the Star Alliance in a commanding position. For a more comprehensive breakdown of how the decision might affect the competitive balance between the alliances and influence other movement within Latin America, see here.
Wednesday, March 6, 2013
Monday, March 4, 2013
Reuters had an interesting article this weekend about the degree to which the FAA relies on employees of aircraft manufacturers to inspect the design and manufacture of aircraft. While the article focuses on a change in policy that was implemented eight years ago, the industry's regulatory practices have long reflected manufacturers' advantages over regulators with regard to budget size and technical expertise. This dynamic is well-captured by John Braithwaite and Peter Drahos in their chapter on Air Transport in Global Business Regulation. At one point, Braithwaite and Drahos go so far as to describe the development of aircraft airworthiness standards by writing, "It is exaggerating only a little to say that Boeing sets regulatory standards for the world." (p. 460)