Buyers Assess Price Rise From Global Airline Alliance

As five major airlines plan to launch the world's biggest single global airline brand next month, some travel managers fear the arrangement will lead to price fixing.

Lufthansa, SAS, United Airlines, Thai Airways International and Air Canada are scheduled to announce their new brand identity on May 14 in Frankfurt. The grouping will come as no surprise to airline industry observers, who have anticipated that carriers which already have vast code-sharing arrangements--as these five do--would join together in larger marketing alliances.

Lennart Johansson, SAS's head of sales and marketing for west Sweden, said the move would bring the prices of all five carriers into line. It is that goal which worries travel managers, who say that while a global alliance will have benefits, the airlines will be able to dictate terms and conditions. "In the future, the world will be dominated by two or three global players, and the customer will have to pay the price they ask or not fly," warned Michael Kirnberger, travel manager for German pharmaceutical company Merck.

Britt-Marie Rosen, travel manager at the Saab group in Sweden, said the alliance would have a negative impact on negotiating. "If you negotiate a deal with one airline, you would have to have that deal with all the airlines."

And Tom Stone, travel manager at Smithkline Beecham, noted the potential problem of "passing on trade-sensitive information from one airline to another."

But Richard Cornwall, travel manager at Price Waterhouse, said that although more prices will be fixed due to decreased competition, "anything that enables passengers to transfer between airlines more seamlessly must be good."

Benefits of the five airlines' multilateral alliance include better connections and timetables, better links around the world and shared airport lounges.