Three-way airline alliance could stunt discounters By Marilyn Adams and Barbara De Lollis, USA TODAY An alliance among Delta, Northwest and Continental airlines, conditionally= =20 OK'd by the Department of Transportation Friday, could be a rare setback=20 for increasingly competitive discount carriers. Some low-fare advocates=20 fear the alliance could keep discounters from starting service in some=20 markets or chase them out of others. "What this will do is make low-fare=20 airlines say, 'Let's give up Grand Rapids and shift flights somewhere=20 else,' " says Ed Faberman, director of a discount-airlines group that=20 opposed the alliance. "Why would Southwest even consider anyplace in=20 Michigan?" If Delta, Northwest and Continental airlines reject the DOT's=20 conditions, the alliance won't go forward. But if they comply, the nation's= =20 third-, fourth- and fifth-largest airlines will be able to sell seats on=20 one another's flights and offer corporate customers discounts using all=20 three airlines. The airlines say they're studying the DOT's decision. Although the alliance is not a merger =97 the airlines remain independent=20 business entities =97 opposing carriers say the conditions on the broadest= =20 partnership yet among major U.S. airlines aren't harsh enough. The partner= =20 airlines combined will control 35% of the nation's air traffic, hold far=20 more airport gates and offer a much richer frequent-flier menu than the=20 carriers do individually. With one call and one ticket, a Delta passenger=20 in Georgia could book a flight to a Michigan city served by Northwest.=20 Frequent fliers will be able to earn and redeem miles on all three=20 carriers. All three airlines will open their airport clubs to partners'=20 members. Northwest and Continental already have a similar partnership, and the DOT=20 last year approved one between United and US Airways, the second- and=20 seventh-largest airlines, respectively, but with fewer conditions. Unlike=20 those pacts, the DOT said the proposed partnership among Delta, Northwest=20 and Continental raised "serious competitive issues" that required=20 restrictions to rein in its potential market clout. For example, the three= =20 airlines could not jointly market flights on routes where they compete=20 head-to-head, such as Houston-Atlanta, and they could not bid jointly for=20 corporate contracts unless the clients request that. Friday's decision could be the best news Delta, which lost $1.3 billion=20 last year, and its partners have seen in a while. Big, traditional airlines= =20 have suffered the past two years from a drop in business travel,=20 terrorism-related fears and high costs. As they've posted losses, cut=20 schedules and laid off thousands of workers, low-fare airlines with low=20 costs have continued growing, opening new cities and gaining market share. Six discount airlines, including Southwest, America West, AirTran and=20 JetBlue, lobbied as a bloc against the three-airline alliance and requested= =20 specific numbers of gates at specific airports. But the DOT didn't require= =20 that the alliance partners give up gates and takeoff slots at congested=20 airports to let competitors in. "If this is accepted, it will be very=20 formidable competition, with the frequent-flier programs and airport clubs= =20 and market concentration," says C.A. Howlett, America West's chief=20 spokesman. "Particularly at older airports, the big carriers have 30- or=20 40-year leases" that shut out new entrants, he said. He said Phoenix-based America West has fought for years to get gates at New= =20 York's LaGuardia, Dallas/Fort Worth, Detroit and Newark, N.J., airports=20 dominated by the biggest airlines. DOT's order requires Delta, Northwest=20 and Continental to give up gates only if used for fewer than six flights= daily. DOT's approval of the United-US Airways deal required no gate give backs.=20 Neither order requires airlines to give up takeoff and landing slots at=20 slot-controlled LaGuardia in New York, the nation's biggest air market. The= =20 alliance also increases the partners' dominance at numerous airports,=20 making it more difficult for rivals to start or expand service. "I don't=20 think any of us have a problem going into a market and competing against=20 one carrier that has 20% of the market," says Robert Land, JetBlue's chief= =20 lobbyist. "It's another when you have to go in and deal with one with 60%." Contributing: Barbara Hansen *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@escape.ca Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: http://www.atlanticlng.com TnT Webdirectory: http://search.co.tt *********************************************************