Airline Alliances Get Scrutinized

The European Union is taking aim at the airline alliances that allow travelers to rack up miles on a number of airlines and let the airlines share some marketing and operating costs. Today, the EU launched antitrust investigations against some members within the Star and Oneworld alliances, specifically in terms of how they operate transatlantic routes.

The investigations focus on Star Alliance members Air Canada, Continental, Lufthansa, and United Airlines; and on Oneworld members American Airlines, British Airways, and Iberia. "The level of cooperation in question appears far more extensive than the general cooperation between these airlines and other airlines which are part of the Star and Oneworld alliances," the European Commission, the EU's competition authority, said in a statement.

European Commission spokesman Jonathan Todd told reporters today that one question in front of investigators is whether the flying public gains anything from the alliances. "When you have cooperation between airlines in such areas as pricing, schedules and capacity, we have to make sure that the consumer actually benefits," he said.

Howard Wheeldon, an analyst with BGC Partners LP in London, told Bloomberg that the EU needs to keep in mind that the airline industry is crashing. "If the EU wants to further damage the airline industry it seems to me like they are going the right way about it," he said. "What is the point if airlines are already suffering?"

The investigation was described as being in a preliminary stage, and the commission doesn't have a deadline to complete its work.