Limits on three airlines' deal show unease By Marilyn Adams, USA TODAY The conditions in the government's approval of a marketing alliance among=20 Delta, Continental and Northwest airlines reflect strong reservations about= =20 letting the deal proceed, industry experts say.The nation's third-, fourth-= =20 and fifth-biggest airlines will announce as soon as today whether they will= =20 accept the conditions and launch the alliance =97 or drop the plan. The deal= =20 would let them sell seats on one another's flights and offer corporate=20 customers discounts using all three. The airlines promoted the deal as a=20 boon to consumers, improving travel options and convenience. But the=20 Department of Transportation concluded the alliance would result in few=20 potential efficiencies for the airlines and relatively few new markets=20 being opened that aren't already served by the carriers individually. And=20 it found potential for "unlawful collusion," airport gate "hoarding" and=20 "detrimental" impact on competitors and consumers from anti-competitive=20 practices or dominant combined market shares in "many cities." "The=20 Delta-Continental-Northwest alliance presents serious competitive=20 concerns," the decision said. "This proposed alliance is substantially=20 different from previous alliances between U.S. airlines, both in terms of=20 the combined size of the three partners and the extent of overlap between=20 their route systems." The decision appears "a little schizophrenic," says Washington-based=20 consultant Jon Ash of Global Aviation Associates. "As with any form of=20 consolidation, there's a skepticism as to whether it will have a beneficial= =20 effect on the public interest." Given that Continental and Northwest=20 already have an alliance and the DOT approved one last year between United= =20 Airlines and US Airways, "it was sort of difficult to keep Delta out of=20 play," Ash says. "Precedent plays a role. If they couldn't find a basis for= =20 rejecting it, their only recourse was to place limitations." Officials at=20 the partner airlines expected the government to prohibit joint marketing of= =20 non-stop flights on which they directly compete, such as between hubs =97=20 Atlanta to Detroit, for example =97 because the other alliances have that=20 condition. But the DOT noted that this was a different alliance. The three= =20 airlines command 35% of domestic traffic and overlap on more than 3,000=20 routes. United and US Airways control just 23% of the domestic market.=20 Under pressure from competing carriers, the DOT imposed more limits on this= =20 partnership than the other two, restricting how the three airlines could=20 market themselves to corporate customers and where jointly marketed flights= =20 can go. Sixty percent of new routes resulting from the alliance must serve= =20 small communities or cities underserved or not served by the carriers now.= =20 Those are constraints not faced by United and US Airways, or by Continental= =20 and Northwest today. The DOT also foresaw few cost savings from the=20 alliance at a time when all three carriers are posting large losses. "None= =20 of this addresses getting cost levels down" at big, traditional airlines,=20 says consultant Ron Kuhlmann of Unisys R2A. *************************************************** 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 *********************************************************