Newspaper article THE JOURNAL RECORD

Are Airline Alliances Saving Passengers Money?

Newspaper article THE JOURNAL RECORD

Are Airline Alliances Saving Passengers Money?

Article excerpt

DALLAS -- Some of the nation's largest airlines are forming alliances to cut costs and attract passengers who have been turning more and more to the Internet for cheap tickets.

But while the airlines may save money, some industry observers worry passengers will pay more.

"It's the age-old argument. Whenever competition is stifled, prices invariably go up," said James Ashurst, a spokesman for the American Society of Travel Agents. On Thursday, AMR's American Airlines, which had considered acquiring or teaming up with US Airways three times since 1994, announced an extensive marketing alliance between the two airlines. Since January, Northwest Airlines and Continental Airlines also have been attempting to get a partnership approved linking the No. 4 and 5 airlines' systems. And a third deal between UAL's United Airlines and Delta Air Lines dissolved Friday. The marketing and routing partnerships are the `90s version of classical mergers, analysts say, and since less competition spurs higher costs, the partnerships are causing concern about passengers' pocketbooks. "I don't want to be a Chicken Little, but I think the sky may be falling," said Paul Hudson, executive director of the Aviation Consumer Action Project. "We've been concerned that alliances equal cartels, and this would essentially make the U.S. industry not competitive, at least not like it's been over the last 20 years." There also are skeptics who wonder if the new alliances will ever get off the ground. Unionized pilots must approve the deals -- their concern apparently scuttled the United-Delta deal -- and questions already are being asked at the highest levels. President Clinton said Friday that the airlines' announcement "should provoke a lot of comment, a lot of thought." But Clinton said the White House had not fully considered the possible antitrust implications. Jay Walker, who runs priceline.com, a company that helps consumers find the cheapest airline tickets over the Internet, says the mini- mergers are necessary because airlines need new marketing to lure consumers back. …

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