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 The Brancatelli File

joe THE UNHOLY AIRLINE EMPIRE

BY JOE BRANCATELLI

February 2, 1998 -- So how shall we discuss this increasingly incestuous spate of airline combinations? Shall we compare arrangements similar to last week's deal between Northwest and Continental airlines to the grand alliances of World War I? Or shall we discuss these deals in terms of Mafia families?

Let's try both. Just for fun--and just to see if we can learn some lessons from an historical perspective.

The World War I analogy is wonderful because all these airlines keep talking about grand alliances, just like the European powers did in the years just before the Great War.

Victorian and Edwardian England, for instance, was roundly criticized for constantly playing one power off against another and for keeping the world in suspense about its true intentions. And have you noticed how British Airways has done the same thing? First it tried code-sharing with United Airlines, then switched to USAir and has recently been trying to forge an alliance with American Airlines. The BA-AA alliance, two years aborning and still caught in a Byzantine regulatory maze, is also likely to eventually include airlines such as Qantas, Iberia, Canadian, Aerolineas Argentina and Japan Airlines.

The World War I analogy also works because of the historical enmity between the French and the Germans. In airline terms, the Germans (Lufthansa) already have an alliance. The so-called Star Alliance fuses Lufthansa with United, Air Canada, SAS Thai, and Varig. And don't be surprised if carriers such as Air New Zealand and Singapore Airlines make this the Octet Entente sometime this year.

As always, the French bumble. In World War I, inept French generals frittered away what was then considered the world's best army and tactical advantages such as the fortifications at Verdun. In airline terms, we have Air France, hobbled by internecine labor and management strife, but still formidable because of the strength of its route network and the superbly situated hub at Charles De Gaulle airport (CDG) near Paris.

Where do the French go for allies? Perhaps to Delta. Perhaps to US Airways, whose chief executive, Steve Wolf, was once an Air France consultant. Or perhaps Air France creates a totally new alliance based on its impregnable Parisian hub. (And, if you want to compare CDG to Verdun, be my guest.)

I'm also fond of the World War I analogy because we can conjure up the image of American chief executive Bob Crandall in one of those spiky German helmets. We can wonder where the disparate--and disorganized--Russian empire of airlines will go. We can note that the current Kaiser of Lufthansa (Fred Reid) is an American, an oddity much like the fact that Germany's Kaiser Wilhelm was the grandson of England's Queen Victoria. But, mostly, we can have fun with the image of Bob Crandall in a spiked helmet.

Yet leave us not ignore the Mafia analogy. Ever since former SAS Svengali Jan Carlson began suggesting in the 1980s that only five huge carriers would dominate world traffic, airline executives have been obsessively trying to create "five families" of airlines that would control the destiny of global aviation.

Which, conveniently enough, is exactly how the legendary Mafia Godfathers carved up old New York. "Five families," each with their own "don," ruled the rackets. The occasional wars and double-dealings between "capos" and "soldiers" notwithstanding, five men ruled the roost--and also spawned the Godfather movies.

In airline terms, we already have the aforementioned Star family of carriers. Then we have Don Bob Crandall and Don Bob Ayling of British Airways running the as yet-unnamed AA-BA family. (Memo to the two Bobs: How about the name Corleone for your family, as in the Corleone Alliance? It's powerful, well-known, feared and there's a shot that Al Pacino might play you when the movie comes out.)

We also have the Northwest-KLM family, which added Continental last week. The extended Northwest-KLM family also includes Alitalia, since the Italian carrier already has made separate peaces with Continental and KLM. Expect airlines such as America West, Malaysia Air Systems, Garuda Indonesia and possibly even Virgin Atlantic to eventually pay homage to Don Dasburg of Northwest and Don Leo of KLM.

Family four could be forged from the Delta-Swissair alliance, which could also conceivably include Austrian, Finnair, Sabena, Transbrasil, TAP Air Portugal and others. Or maybe not. As is always the case when dealing with racketeers, there could be some sellouts. One scenario has it that Swissair will eventually defect to the BA-AA family. And you can't ignore the fact that Finnair, long a Delta partner, has recently been doing business on the side with British Airways.

The fifth family could be built around Air France. Should it decide not to do business with Delta, a combination with TWA and US Airways would be logical. In fact, TWA and US Airways might have to ally as a result of the Northwest-Continental deal anyway. And there are scores of other small-time airlines willing to be soldiers and capos in the new families: Arab carriers looking for strong European and U.S. Godfathers; the carriers of the old Ottoman and Hapsburg empires; All Nippon and Cathay Pacific; and several Latin American carriers desperate for protection from American Airlines.

Now regardless of whether you see this scary new world of airline combinations as a duplication of the Great War alliances or a sort of Mafia scenario, there is one thing that the analogies have in common: Both are based on hideous, repulsive entities that shed an enormous amount of the blood of innocent bystanders.

Who are the innocent bystanders here? Frequent flyers, of course. These airlines choose up their unholy alliances and form their corrupt little families and their ultimate aim is to control our lives. They merge, ally, combine and intertwine and, every time they do, we have less choice, less competition, worse service and higher airfares.

Who, I wonder, will be our Blackjack Pershing? Who, I wonder, will be our racket-busting Elliott Ness?

This column originally appeared at TheTrip.com.

Copyright 1993-2004 by Joe Brancatelli. All rights reserved.