Alliances of global airlines — oneworld, Skyteam, and Star Alliance — are under attack. Attached to proposed legislation to upgrade the air traffic control system, a new proposal could be the death knell for the alliances — or at least the end of their legal presence in the United States.

Rep. James Oberstar (D-Minn.), a longtime critic of the alliance system is harnessing unease in Washington D.C. about the competitive impact of international pacts to back a bill that could have a drastic impact on existing and planned airline cooperation.

The chairman of the U.S. congressional committee that oversees airlines is pushing an aviation bill that would automatically withdraw antitrust approval for alliances within three years, although they could be restarted under more stringent rules.

The bill is attached to a $70 billion proposal to modernize the creaking U.S. air traffic control system, which gives it a greater chance of becoming law.

Its provisions could lead to the rolling back of the antitrust immunity, or ATI, already in effect for members of the Star and SkyTeam alliances. It could also derail efforts to expand these groupings and extend immunity to members of Oneworld, the smallest of the three.

Remember that Oberstar is the same legislator trying to block liberalization of airline ownership rules. I would argue that alliances would never have become necessary if nations — like the US — had more reasonable cross-border ownership rules. The alliances are a way to give the companies backdoor merger benefits (e.g., “revenue sharing” on trans-Atlantic routes) alongside the efficiencies that come with aligned schedules.

So what happens if alliances are declared a monopoly in the US, or elsewhere? Frankly, it could be a good thing for passengers, as long as codesharing isn’t entirely eliminated in the process. Alliances may have benefited travelers where schedule alignment and frequent flyer partnerships are concerned, but they’re legal oligopolies. They admit as much: That’s why they require antitrust immunity in order to function.

If airline alliances were to disappear, international passengers would likely see some inconvenience at first. But how much inconvenience? Global lounge access? Priority tags on your luggage? Really, what would change? And for how long? Over time, airlines would negotiate bilateral partnerships in lieu of broad alliances.

And what about the upside? As it stands, alliances are essentially a legalized price-fixing scheme. They’ve always been for the convenience of the airlines, not the passenger. So eliminating price fixing sounds like an easy win for the consumer.

Oberstar may be wrongheaded with his advocacy of protectionism, but he may be onto something with regard to alliances.

Unable to find agreement to merge (thankfully), Continental and United have announced plans to partner, with Continental joining the Star Alliance in 2009, subject to regulatory approvals. With alliances being mutually exclusive, that means the SkyTeam alliance, with Delta and Northwest anchoring the North American members, will lose a major player.

In an e-mail to Mileage Plus members, United is pitching this as a benefit to frequent flyers, with an increase in mileage (and status) earning opportunities. Codesharing would commence upon approval, and Continental would align its schedule to coincide with United and Lufthansa, the two anchors of the alliance.

For frequent flyers in the two programs, there are questions that arise: United is pitching the reciprocity angle, where you receive and accrue benefits in either program, but Continental and United have very different programs, especially in terms of how status miles collect (where you buy the fare matters to CO, not to UA) and how upgrades are obtained (“unlimited” on CO, based on status, vs. certificate-based on UA).

And then there’s this: “Internationally, Continental and United will establish joint ventures that will allow us to cooperate with each other and with other Star Alliance airlines throughout the world.” Will these “joint ventures” be a new airline, like British Airways’ OpenSkies?

Stay tuned. Either way, changes afoot.

Upgraded: JetBlue joining Star Alliance?
German carrier Lufthansa bought a 19% stake in JetBlue, a $300 million investment in the original luxe discount carrier. There’s no talk of merger, or even alliance. Yet. But the companies Lufthansa invests in have the tendency to join Star Alliance.

Upgraded: Star Alliance, again
So JetBlue’s membership is pure speculation. But Star Alliance *did* invite Air India into the alliance for eventual membership. And just yesterday, Air China and Shanghai Airlines officially joined the alliance.

Upgraded: Silverjet, at Maxjet’s expense
Maxjet’s woes, Silverjet’s joy? “Silverjet, which operates all-business-class flights from London to New York and Dubai, said that through Tuesday, the carrier had seen a 20 percent surge in bookings since MAXjet’s announcement.”

Upgraded: Planepooling
With a major treaty to be signed in Lisbon, some EU member states’ prime ministers are flying there together, carpool style, in an effort to reduce their carbon footprint. (Thanks, Dr. Vino!)

Upgraded: Editors’ hateful laziness
Who came up with this headline? “French rude and their hotels smell.” Top shelf editorial work, team!

Downgraded: Traveler’s IQ, and traveler’s brain cells
If you packed a one-liter bottle of vodka in your carry-on, and airport security says you can’t take it onboard, what would you do? If you said, “Open the bottle and chug the entire contents before going through the metal detector,” then you might be the now-hospitalized 64-year old resident of Dresden, Germany who proved he couldn’t hold his liquor at the Nuremberg airport. He should have just checked the booze.

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I’ve been encountering US Airways a bit lately, and it hasn’t always been fun. A function of my recent move to North Carolina, perhaps. Hard to avoid US Airways in these parts. But having previously observed that United-US Airways codesharing and cooperation aren’t living up to their hype, I’m still convinced that these two Star Alliance partners aren’t working well together, and need to shape up their cooperation.

The breakdown of cooperation starts with the little things, right at the time of purchase: Why can’t the US Airways website allow me to enter my United frequent flyer number in the reservation? They’re both in Star Alliance, and other Star Alliance carriers let you choose from a range of different frequent flyer options.

Update: The option to add other airlines’ frequent flyer numbers is back on the US Airways site. Not sure what was missing when I booked, but it’s there now. Yay!

Admittedly, other sites have similar issues, especially third party booking sites — Orbitz, I’m looking at you. I bought a ticket on Orbitz recently when no one else would sell me that particular itinerary at a lower price. Again, no option to enter a partner airline’s frequent flyer account. I could enter a US Airways account number, or nothing at all. This limitation isn’t isolated to Star Alliance, either. If you, say, book a British Airways ticket, you can only enter a British Airways frequent flyer number, and not an American Airlines number. (Expedia is much more flexible with frequent flyer accounts.) Alliances and partnerships aren’t new, people! Give us the option!

The cooperation breakdown continues at check-in: My wife bought a United-coded ticket for an all-US Airways flight on United.com (the UA-coded ticket was cheaper) but when she got to the airport to check in, she was told that the ticket wasn’t paid for. Apparently, United hadn’t transmitted the funds to US Airways, and the ticket was still listed as reserved, not issued. Her United receipt (and credit card statement) showed that it was indeed paid, but until the ticket number was manually entered into the computer record, she wasn’t getting a boarding pass.

This is stupid. I know there are incredible complexities that arise when large organizations attempt to integrate or link their data systems, but if the increasing frequency of these kinks is any indication, the problems are getting worse with time, not better.

Related:
- Star Alliance out of alignment: Are United and US Airways fighting codeshare wars?
- Update: US Airways and United codeshare conundrums
- Confused by codeshares? Sue!

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Last year, Star Alliance announced intra-alliance upgrade awards, a system that allowed frequent flyer members of one airline to use their miles on another Star Alliance member’s flight. It’s a great concept, and a great option for those looking to draw down their frequent flyer balances, though the “cost” in miles isn’t always cheap.

But United Airlines frequent flyers won’t be able to participate any longer. Though the airline is one of the founding members of Star Alliance, and though UA offered Star Alliance Upgrades for several months, that feature is gone.

The United website’s page for Star Alliance Upgrades now reads:

Effective May 31, 2007: We will no longer accept Star Alliance Upgrade Award requests at this time. We apologize for any inconvenience.

Is this yet another Mileage Plus program devaluation, or more evidence of problems with intra-Star Alliance cooperation? Other programs don’t appear to have shut down their upgrade functionality, so the problem seems to rest with United.

Readers have been reporting mixed information from United on the intra-alliance upgrade front. Reader Samuel says he bought a flight on Singapore Airlines, and that United told him he could request an upgrade if he booked the ticket in Q class or higher. But Singapore didn’t accept United miles for upgrades, even when the program was functional. (See the chart below, taken from the Star Alliance website, obviously out of date at this point.) Samuel’s problem is emblematic of the confusion over this now-defunct benefit.

So why are the upgrades kaput? Unclear. United has the largest frequent flyer program within the alliance, so perhaps other programs were getting flooded with upgrade requests from United members. The bottom line is a further downgrade of Mileage Plus.

I’ve contacted United and Star Alliance to inquire why UA is no longer a participant. We’ll see if there’s anything to report, and I’ll post whatever I learn.

Hat tip to Benet Wilson for pointing out the changed web page!

While airline alliances were created for the primary benefit of the member airlines, they also promise benefits to the flying public, such as the ability to buy a wider range of codeshared flights. So why are US Airways and United Airlines refusing to sell each others’ flights?

Last night, I tried to reserve an itinerary, sold by US Airways, that involved a change of planes in Charlotte. Ideally, I wanted the final leg of my trip, from Charlotte to Chicago, to be the US-codeshared flight operated by United. The United flight’s time was more convenient, and I could sit in Economy Plus or even try my luck at burning an upgrade or two.

I knew from the timetables that the flight existed, that it carried a US Airways number (US Airways Flight US5909, operated by United Airlines as Flight UA569), and that it was available for sale on sites like Orbitz, at the same exact price as other itineraries that were wholly operated by US Airways.

But US Airways wouldn’t reserve the flight for me.

Here’s how it worked: I started by going online and searching for flights. US Airways’ website did not include a single flight that was operated by United in its search results. Not one. Neither as a US-labeled codeshare, nor as a UA-numbered flight.

So I tried United’s website. Their search engine lets you tick a box to “include Star Alliance flights” in the search results. But it only included some Star Alliance flights, and only ones that carried a United codeshare number. The list wasn’t exhaustive, either — not all codeshared flights were listed. And it didn’t include any flights that were sold under the US flight number.

In the past, I have been able to use United’s site to book flights on other Star Alliance carriers, usually as part of a mixed itinerary. That doesn’t appear to be consistently possible any more. The site’s help page for booking codeshares implies that it should still be possible to book Star Alliance and codeshare flights using their tool. But the options are severely restricted.

None of this would have been an issue if I had been ready to pull the trigger and purchase the ticket right then and there. I could have just gone to Orbitz and bought the flight, albeit with a $6 surcharge. But I wanted to put the flight on a 24-hour hold, and Orbitz doesn’t allow that. US Airways’ website doesn’t allow putting flights on hold, either (that’s a post for another day), so I picked up the phone and called them.

The phone agent couldn’t — or wouldn’t — reserve the flight I wanted. I gave them the flight number — US5909 — but the answer was no. “That flight is not available for purchase.” So I settled for a later flight, which leaves me more time to partake in the Charlotte Airport’s rocking chairs, barbeque stands, and North Carolina wine bar.

My experience doesn’t appear to be a complete fluke. I’ve seen this sort of thing before, but I’ve always assumed it was just a temporary glitch. After seeing this again and again, it seems deliberate. To give them one last benefit of the doubt, I just tried searching different itineraries (some domestic, some international) on both the United and the US Airways websites. US Airways excluded every United-operated option, every time. United’s website included some US Airways flights, but only if they carried a UA number. Other Star Alliance carriers, like Lufthansa, didn’t face the same discrimination.

My only conclusion: US Airways and United are no longer fully cooperating within the Star Alliance. It’s stupid, it’s annoying, and it irritates the consumer. Fix it.

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