Protectionism may impede Delta’s expansion plans
Airline joint ventures are facing more scrutiny from regulators
AS AMERICA’S oldest airline still aloft, Delta makes much of its southern roots. At its biggest hub, Atlanta airport, the company museum recounts how it became the world’s second-biggest carrier.The answer: by buying up domestic rivals. With few takeover targets left at home, Delta’s chief executive, Ed Bastian, is looking abroad. But his plans for more foreign joint ventures (JVs) face regulatory headwinds.
Last year Mr Bastian announced a flurry of JVs. In May Delta launched one with Aeromexico and in June another with Korean Air. In July Delta formed one of the world’s biggest JVs with Virgin Atlantic of Britain and Air France-KLM, a European group. In December it sealed one with WestJet, Canada’s biggest low-cost carrier. It wants closer relations with China Eastern and GOL of Brazil, two airlines in which it owns shares. Andon March 12th it emerged that Delta and Air France-KLM plan to bid for Air India, an ailing flag carrier. If all these deals come off, one passenger in eight worldwide will fly on carriers linked to Delta by JVs or equity stakes.
headwind: a wind that is blowing toward something such as a ship or an airplane as it moves forward
达美航空能成为世界第二大航空，是靠着吞并小航空公司起家的，国内基本没啥好收购的公司了，就开始和国外的公司搞联盟...
America’s domestic market is “relatively mature”, says Mr Bastian. Flying visitors in and out of the country is where the growth opportunities lie. Airline JVs, which are granted exemptions from antitrust law, allow Delta to sidestep national ownership rules that block cross-border mergers. Foreigners cannot own over 25% of airlines in America or over 49% in the EU, for example. In JVs carriers combine operations and share revenues and profits but preserve national ownership. They produce 90% of the cost savings of a full merger, says Alan Lewis of LEK Consulting. Shallower forms of co-operation—such as the one world alliance, Skyteam or Star Alliance—produceas little as 25% of the benefits because they fall under antitrust rules.
Other airlines are thus also keen on JVs.Three of these, including Delta’s, now control nearly 80% of the market for transatlantic flights, according to OAG, a data firm. And the tie-ups, which tend to be anonymous, are expanding. Between 2006 and 2016 the share of long-haul passenger traffic controlled by JVs grew from 5% to 25%. It is set to rise to 35% by 2021.
sidestep: to avoid walking into or being hit by someone or something by stepping to the right or left
In the past, regulators waved through such deals. Although JVs reduce competition by letting rival carriers act as a single entity, it was thought that some cost savings would be passed on to passengers so long as new airlines could compete with incumbents. That is why JVs are generally allowed only in places with open-skies agreements, where such competition is possible, explains Dave Emerson of Bain & Company, a consultancy.
IATA, a trade group for legacy carriers, claims that JVs do indeed lower fares. Recent studies suggest they do not—at least where room for new entrants is limited. Several have found that fares in markets dominated by JVs have risen significantly relative to routes with none.The JV between American Airlines and British Airways (BA) in 2010 resulted in higher transatlantic economy fares at BA, whose home hub, Heathrow, is Europe’s most congested airport. Barriers to entry are rising; 19 European airports will be as full as Heathrow by 2035, reckons ACI Europe, a trade group.
一开始觉得联营会让成本降下来，然后让利给顾客，让票价成本降下来，但是最近的研究发现，那些联营的航线票价却比那些没有联营的航线高出了不少...
Regulatory hostility is growing. In 2016 America rejected a JV between American and Qantas, arguing it would raise fares. Watchdogs are also being tougher on Delta. Its JV with Aeromexico was approved only after it added a sunset clause and gave up airport slots at Mexico City and New York. In January the EU forced KLM, Delta’s oldest JV partner, to surrender slots on its flagship Amsterdam-New York route.
Expansion plans like Mr Bastian’s may also run up against rising protectionism. After Britain leaves the EU, it will have to negotiate a new open-skies agreement with America. On March 6th the Financial Times revealed that the Trump administration wants stricter terms for Britain. Under America’s proposed ownership rules, if a planned purchase by Air France of 31% of Virgin goes ahead, it may no longer be British enough to qualify for the open-skies agreement and thus for its JV with Delta.
Although JVs are falling out of favour with authorities, airlines are still keen on consolidation. With scale, “I don’t think we’re ever going to lose money again”, American’s boss recently proclaimed. The carrier has duly resubmitted its JV with Qantas to regulators.At the Atlanta museum, displays of crew uniforms and other items from the 40 defunct carriers Delta has swallowed hold a lesson for airlines. In one curator’s words, it’s “get big or die.”
hostility: an unfriendly or hostile state, attitude, or action
defunct: no longer existing or being used
点评：从航空公司的历史来看，要么吞并别人变大变强，要么死
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Results
Lexile®Measure: 1100L - 1200L
Mean Sentence Length: 15.79
Mean Log Word Frequency: 2.95
Word Count: 758
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