Peter Carter: Airline Joint Ventures are Putting Atlanta Front and Center on the Global Stage
Wednesday, July 10th, 2019
For Georgians, it has never been easier to travel internationally. Take for example, Delta’s non-stop flight between Atlanta’s Hartsfield-Jackson International Airport and Seoul, Korea. This flight was made possible by Delta’s joint venture partnership with Korean Air, which gives travelers convenient access and a seamless experience across the Pacific, with easy connections beyond Seoul to more than 80 additional destinations across Asia.
Likewise, the Delta-Aeromexico joint venture offers customers enhanced service and more attractive flight options to Mexico. Since Delta an Aeromexico pioneered the first trans-border airline joint venture between the U.S. and Mexico, more than 14.4 million passengers have benefited from the carriers’ integration during the past two years. Today, Delta and Aeromexico jointly offer more than 1,100 weekly flights on 64 routes between 11 cities in Mexico and 33 in the United States.
These flights, and the many other international destinations served directly from Delta’s hub in Atlanta, serve as economic engines for the state of Georgia and provide convenient connecting options for consumers across the Southeast.
Over the last 20 years, these international airline joint ventures have created enormous benefits for global travelers. They allow carriers to create global networks that no single airline could build on its own because of international treaties and national laws that prevent foreign ownership of airlines.
Joint ventures have resulted in lower prices, new cities served, increased capacity, and more convenient service options for travelers. By pooling their resources, the JV partners can offer their customers the most attractive offerings (both in terms of price and schedule) across a much larger global network with nearly the same efficiency as a single carrier.
For example, since the start of Delta’s joint venture with Air France-KLM, the carriers have doubled the volume of their services on key routes across the Atlantic. This includes more service on hub-to-hub routes such as Detroit-Paris and Atlanta-Amsterdam, as well as new, non-stop service to Europe from smaller cities such as Indianapolis, Raleigh/Durham and Salt Lake City, which would not be economical without the joint venture. The new routes and additional capacity, along with streamlined access to the combined network, creates better schedules and more competitive fares for consumers.
Joint ventures have also incentivized carriers to enhance their frequent flier programs, upgrade and harmonize their technology, and to invest in airport improvements. Because of joint ventures, customers have more choices, more convenient flight times, and more seamless travel options throughout the world.
Despite all of these benefits, joint ventures have recently drawn criticism. For instance, Robyn Hayes, the CEO of Jet Blue, claimed in a speech late last year that they have reduced competition and led to higher fares on routes between the United States and Europe. The truth is exactly the opposite. As noted above, travelers to Europe have a range of choices among carriers, including on the various joint venture carriers as well as the many new entrants and low cost carriers serving transatlantic markets such as Icelandair and Norwegian Air.
The best available data flatly contradict the claim that fares are higher because of joint ventures. In fact, the most recent empirical analysis of the topic, a comprehensive 2017 study by economists Robert Calzaretta, Yair Eilat, and Mark Israel, found that international joint ventures have lowered prices, not raised them.
Joint ventures have been a key driver of growth and competition in international aviation, providing travelers with more choices and better service. One has to look no further than Atlanta to see the benefits of putting a region at the forefront of international travel and commerce. Our city has truly become a global business center and continues to thrive on the world stage.
Policymakers should ignore the self-interested criticism from competing airlines and continue to support the development of joint ventures. The traveling public deserves nothing less.