he airline alliance wars are heating up again, so here's a quick refresher course about what's at stake.

American Airlines and British Airways are once again seeking government approval to link their systems and strengthen their fledgling Oneworld alliance. Oneworld, in case you lost your program, also includes a half-dozen other carriers, but American and BA claim that unless they have antitrust immunity to agree on prices, capacity and scheduling, Oneworld is no match for the Star Alliance (anchored by United and Lufthansa), Wings (Northwest and KLM) or SkyTeam (Delta and Air France).


Clearly, the big international airlines believe (or at least they tell their governments they believe) that they are no longer competing against each other. Rather, their alliances are competing against each other.

Here's another way to look at it: American and British Airways want to stop being head-to-head competitors on nonstop routes to London from New York, Chicago, Los Angeles and other U.S. gateways. Instead, they want immunity from the antitrust laws to fix prices and capacity on those routes, and operate them jointly.

They say consumers will be better off.

As you may have read, our government allows U.S. airlines to do this sort of thing, but only if the partner airline comes from a country that has an "open skies" agreement with the U.S. "Open skies" means any U.S. airline can fly to and beyond the other country from any U.S. gateway, with no government controls on fares, routes, capacity or scheduling. The airlines of the other country get the same freedom.

The idea is that an "open skies" environment guarantees that the partner airlines will still face the rigors of a competitive marketplace, even after they combine their operations. This idea did not originate with the current Bush administration, but you might still regard it as something of a "faith-based initiative."

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