Independent carriers, a competitive check on expanding alliances

Independent competitors are paramount for consumer choice and a functioning marketplace. When an industry contracts due to consolidation and joint ventures or alliances, having a sufficient number of players is essential to safeguard vigorous competition.

In aviation, mergers between one-time competitors have occurred on both sides of the Atlantic. The three global alliances have swollen to encompass over 50 airlines, many of them jointly setting fares and coordinating capacity under grants of antitrust immunity (ATI).

Last year a watershed event in global aviation competition policy occurred which cannot be viewed in isolation. When US and European regulators approved ATI for the long — pending British Airways and American Airlines alliance, it signalled that authorities have largely accepted competition amongst alliances alone will ensure meaningful consumer choice — the proposition advocated by Star, SkyTeam and oneworld.

However, never have non-aligned carriers been more essential as a competitive counter-balance to this evolving alliance dynamic.

Can three globe-spanning competitors be sufficient in a consolidating airline industry? Should international passengers have little option but the three alliances to guarantee optimum choice and provide consistently vigorous competition?

Simply put, Emirates believes four groups of competitors are better than three in protecting consumers and ensuring meaningful competition.

At a minimum, governments cannot stand idly by when mega-alliances, individually or via a trade association, engage in activities aimed at thwarting independent competitors. ATI is premised on open and competitive markets. It was never intended as a licence to thwart airlines that chose to remain outside the alliance-fold. Independent carriers offer consumers an alternative in innumerable markets, often with industry-leading service and competitive fares, or in the low-cost arena.

For consumers who do not begin or end their journeys at mega-alliance hubs, independent carriers often offer a more convenient one-stop option rather than the multi-stop alternative required by some alliance frameworks.

Independent carriers are today often the only airlines willing to enter mega-alliance hubs and compete on important routes to give consumers choice. Emirates is one such carrier.

Judging by the time some alliance members seemingly spend campaigning against them, it is obvious independent carriers are making an important contribution to expanding consumer choice and competitively disciplining alliances. Denying the travelling public an independent alternative and a much-valued competitive choice is the goal of some of these European carriers. Their single-minded focus appears to be on attacking competitors — rather than improving their own air service.

What began as seemingly isolated rumour mongering by a few European competitors has recently evolved into a concerted global campaign to stamp out competition from Emirates and other non-aligned carriers. It is being waged at both the alliance and trade association levels. While in name Emirates is the target, it is a proxy for the ultimate intent: to preserve alliance carrier market share, sacrificing consumer choice in the bargain.

For governments, the louder some alliance members complain, the more important independent carriers should become to consumers and the global competitive landscape. (Open Sky, Emirates)