Sam Denby delivers a jarring revelation to the frequent flyer: the bustling competition you see at JFK is a carefully constructed illusion. While most travelers assume that dozens of airlines fighting for routes means lower prices, Denby exposes a legally sanctioned cartel where competitors act as a single entity to fix fares and schedules. This is not a conspiracy theory whispered in airport lounges; it is a documented reality approved by the highest regulators in the US and Europe.
The Facade of Competition
Denby begins by dismantling the visual evidence of a healthy market. He notes that while "on the surface, it appears that 33 different airlines fly 126 different routes between New York and Europe," the reality is far more rigid. The author points out that if you look at specific routes, such as flights to Brussels, you might see a choice between Brussels Airlines and United, but "what you wouldn't have is a choice on how much to pay." This observation is the piece's anchor. It forces the reader to realize that the logos on the fuselage are merely branding for a unified pricing algorithm.
The core of Denby's argument is that these airlines have formed joint ventures that function as monopolies. He writes, "Brussels Airlines and United are effectively acting as a single airline." This isn't accidental alignment; it is a coordinated effort where they "pull transatlantic revenue, then distribute it according to the terms of their joint venture agreement." The implication is stark: it does not matter which plane you board, because the airline alliance keeps the profit pool the same regardless of the carrier.
It's hardly a secret that these airlines are price fixing. They'll happily discuss it with their investors.
This admission by the airlines themselves is chilling. Denby highlights that this behavior would land any normal business in prison, yet these carriers operate under a specific exemption. He cites Article 101 of the treaty on the functioning of the European Union, which prohibits agreements that "directly or indirectly fix purchase or selling prices." Yet, the European Commission and the US Department of Transportation have granted these groups immunity. The result is a market where three major alliances control 75% of all flights from New York to Europe, and in smaller markets like Washington DC, that number swells to 85%.
The Regulatory Loophole
The most fascinating part of Denby's coverage is his dissection of the legal justification for this collusion. He explains that American law allows the Department of Transportation to grant antitrust immunity, but only if the "public benefits enabled by collusion outweigh the negative consequences of reduced competition." Denby meticulously traces the circular logic used by regulators to approve these deals.
He details how Delta and Virgin Atlantic argued that their partnership was necessary to create a "meaningful competitive alternative to the alliance between American Airlines and British Airways." Denby notes the absurdity here: "If the public benefit for Delta and Virgin's joint venture was the creation of a strong competitor... that must mean that American and British Airways' joint venture created a public detriment." Yet, the DOT had already approved the American-British Airways deal years prior. The author points out the recursive nature of the approvals: Delta was allowed to collude to compete with a colluding group, which was allowed to collude to compete with another colluding group.
Critics might argue that without these joint ventures, airlines would simply stop serving smaller routes, leaving passengers with fewer options. Denby anticipates this but counters by showing that the airlines were already integrating their networks before they ever received legal immunity.
United and Lufthansa did not start integrating their networks in 1996 upon approval of their antitrust immunity waiver. They did so in 1993.
This timeline is the piece's knockout punch. Denby reveals that the airlines were already coordinating schedules and selling connecting tickets to expand their networks three years before they asked for the right to fix prices. He argues that the immunity was not the catalyst for consumer benefit, but rather a tool to secure higher profits for a system that was already functioning.
The Alternative Model
To prove that antitrust immunity is unnecessary for network integration, Denby contrasts the immunized cartels with non-immunized partnerships. He points to the deep cooperation between American Airlines and Qatar Airways, or United and Emirates. These partnerships offer "network integration, schedule coordination, through ticketing while keeping Qatar and American as competitors."
In these non-immunized scenarios, the airlines remain distinct competitors. As Denby explains, for a passenger traveling from Boston to Delhi, the two airlines offer "two different itineraries at two different price points." Because they cannot pool their revenue or fix prices, they must compete on service and cost. This demonstrates that the "public benefit" the airlines claim requires immunity is actually achievable without it. The only thing the immunity provides is the ability to stop competing on price.
The downside of the current system is already visible in the data. Denby notes that on competitive routes to major Italian cities like Milan and Rome, where four genuine competitors fight, prices are low. However, on routes to smaller markets where the joint ventures dominate, the lack of competition allows fares to remain artificially high. The author suggests that as more airlines like SAS and ITA Airways join these alliances, the problem will only worsen, potentially reaching 89% market control in some sectors.
This is a legally approved cartel. European and American regulators have allowed these airlines to collude against the consumer.
Denby's framing is effective because it strips away the bureaucratic jargon of "joint ventures" and "antitrust immunity" to reveal the simple truth: these companies are acting as a cartel, and the government has signed off on it. The argument holds up because it relies on the airlines' own filings and the clear timeline of their actions, rather than speculation.
Bottom Line
Denby's strongest contribution is exposing the circular logic regulators use to justify price-fixing as a public good, proving that network integration happens regardless of immunity. The argument's vulnerability lies in the assumption that non-immunized partnerships can fully replicate the efficiency of a fully integrated revenue-sharing model, a nuance the airlines will undoubtedly fight. Readers should watch for the upcoming approval of new alliance members, which could cement this cartel structure for the next decade.