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Airline Mergers Threaten National Airline Sovereignty

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Message Elaine Cullen

In a large number of recent transnational mergers and joint agreements between airlines, what isoccurring is the loss of sovereign national control over national airlines and national airspace. Historically, nations have had sovereign national airlines, which protected both their domestic and international air travel as a security and economic goal. It also served to control and protect their national air space security in terms of foreign airlines and their actions national airspace. Recently Japan Airlines has been considering a joint agreement with either Delta or American Airlines, with both airlines promising an infusion of a large amount of money into ailing Japan Airlines. Just in the last year, there has been a large number of joint agreements between airlines in foreign countries, which involve an integration of airline routing, services and fees and a sharing of revenues between the companies. This is a non open type of "integration" between the airlines, which serves to circumvent U.S. and other country's antitrust laws meant to restrict foreign nations or foreign national airlines to a limited and non controlling involvement or interest in national airlines.Â

The recent joint agreements between airlines have involved the joint venture between Lufthansa, United, Continental, Air Canada, Austria, British BMI, Polish LOT, Swiss and Portugal's TAP airlines. In July, 2009, The U.S. Department of Transportation agreed to the joint venture. The U.S. Justice Department objected to the Department of Transportation's granting of antitrust immunity to the joint venture. The joint venture is problematic both in regard to safeguarding of U.S. control of U.S. airlines, in this case United and Continental and also problematic in terms of antitrust regulations regarding monopoly as well.

This multinational joint venture is not the only one occurring recently. In May, 2009, Delta which had recently merged with Northwest, and Air France which is merged with Dutch KLM, signed a joint agreement as well. In December 2009, Australia's Virgin Blue and Delta got the go ahead from Australian officials for a joint agreement and in late December 2009, Japan's All Nippon Airways, United and Continental signed a joint agreement, pending an OK by the U.S. government for antitrust immunity for the agreement.

The government of Japan asked for immunity from all U.S. antitrust laws in regard to both the All Nippon Airways joint agreement with United and Continental and a possible joint agreement with Japan Airlines and either Delta Airlines or United Airlines. Japan has linked their grant request for antitrust immunity in the United States, with it's Open Skies Treaty with the U.S., which would grant Japanese airlines both open skies allowances for flights in the U.S. as well as immunity from antitrust violations. Germany and France as nations have also linked antitrust immunity with their Open Skies Treaties.

The issue of Open Skies treaties, are, in and of themselves, problematic in regard to security and airline competition. The Open Skies treaties allows airlines from a nation to fly to any destinations in a foreign nation with which they have an Open Skies agreement, as often as they want, without restriction. This cuts national control over both where and how often foreign national airlines fly into a country. Most of the Open Skies treaties between nations have been signed in the last ten years, exactly the time period when more national and international airline security has been called for, not less. It has also created a situation where the security required for international flights is increased, given the increased demand.

Open Skies treaties allow for airlines, which previously were only allowed to originate flights to a foreign country in their own nation, to fly from one foreign nation to another foreign nation, without originating flights in their nation. For example, previously an American airline such as United could fly from the United States to another country. They were not allowed to originate a flight from a foreign country to fly to another country. For instance, United could not originate a United flight in Athens, Greece to fly to Nairobi, Kenya. Given the Open Skies Treaties, nations are now allowed to do that.
The Japanese government's request for a grantof immunity from antitrust regulations in the U.S. and other countries, at the same time they sign the Open Skies Treaty, which Germany and France have also asked to be granted in foreign nations, is particularly problematic given the freedoms granted foreign airlines in Open Skies treaties and the potential for abuse.Â

In the case of Japan Airlines, in April 2008, they pled guilty to a U.S. Justice Department criminal finding of cargo shipment price fixing. A few other international airlines have also been found guilty of price fixing in the United States as well, which illustrates the potential for abuse.
As well, both the joint agreements and the airline alliances, the three major ones being Skyteam, Oneworld and Star Alliance, have given rise to a number of cross national airline mergers that have served to destroy fully sovereign national airlines. Many nations in Europe have lost their sovereign national airlines. In the case of the Netherlands's KLM and Air France, the merger has served to destroy the sole sovereign national airlines.KLM and Air Francealso invested heavily in Italy's Alitalia. British Airways has merged with Spain's Iberia Airlines.

In the case of German Lufthansa, Lufthansa has taken over Swiss Air, Brussels Airlines, which replaced Belgium's Sabena Airlines, Austrian Airlines, and British Midland Airways, and has made a significant investment in Scandinavian SAS. Lufthansa has also made a significant investment in the U.S. airline, Jet Blue.
There has been recent discussion of a merger between British Airways which is now merged with Iberia and American Airlines. American Airlines, is the U.S.'s second largest airline carrier after the recently merged Delta with Northwest, and this action would result in the U.S. losing sovereign national control of it's second largest national airline.

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Elaine Cullen Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

My interests are in international politics and economics.I have a journalism degree and post graduate study in economics. I have worked in the automobile and airline industry.
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