Somehow I’m afraid I can’t see this going ahead. The ACCC’s idea of competition quite rightly varies with the times – but what will it be this time? Consider that a deeper relationship than the one proposed by Virgin Blue and Delta was approved between Qantas and American Airlines when they formed the Oneworld alliance so they could compete against the then-mighty United Airlines (which at the time could count on their local Star Alliance partner Ansett Australia). Now however, with Singapore Airlines continually being denied the rights to fly Australia-US, having four, not two, carriers duking it out in price wars is exactly the competition the ACCC likes to see. Air New Zealand also appears to like things the way they are, as they’re preparing to appeal the proposed Virgin Blue/Delta tie-up.

The biggest stumbling block of all though is the US Department of Justice. They’ve stalled Continental Airlines’ entry to Star Alliance on antitrust immunity grounds on how trans-Pacific, trans-Atlantic, and US-Canada flights would be handled with prospective Star Alliance partners. The US DoJ is also firmly denying antitrust immunity on trans-Atlantic flights for Oneworld partners American Airlines, British Airways, and Iberia – for the second time in three years – deeming it uncompetitive.

It’s not hard to blame the US DoJ though. Partnering through alliances is good for customer loyalty to airlines via pooled frequent flyer programs and smooth interline agreements spanning the globe. The customers that benefitted most from this though are business travellers that no longer dominate the departure lounges. Since big business has discovered that big business can continue without big travel budgets, most seats are now occupied by leisure travellers. With it have come shifting priorities away from the perks of airline alliances towards the bottom line of any flight – how much is the seat, and what precisely do you get for the money paid?

It’s this bang-for-your-buck mentality which is putting Middle Eastern carriers such as Qatar Airways, Emirates, and Etihad at the top of most Aussie travellers’ minds when they think of heading to Europe – they don’t need a network of airline partners to connect with at London or Frankfurt, because a leisure traveller would consider taking a train or hire car instead where the formerly-dominant business traveller wouldn’t. This is exactly what is significantly eroding Qantas’ and especially United’s position on their trans-Pacific routes, and makes a nonsense of the Virgin Blue/Delta tie-up’s promise of “a greater choice of destinations”. Leisure travellers already have an enormous choice of destinations in the US and Canada at reasonable prices – thanks to low-cost carriers such as Southwest, JetBlue, and Virgin America. Qantas and United know this, which is why they’ve cast aside their superior networks as competitive differentiators and been as happy as anyone else to discount seat prices deeply.

In the meantime, we can sit back, relax, and enjoy the lowest fares ever on the Sydney-Los Angeles route on a choice of four airlines – three of which are world-class =P Don’t forget that non-stop trans-Pacific flights are also offered by Air Canada to Vancouver, and that competitive one-stop flights are available via Auckland (Air New Zealand), Tahiti (Air Tahiti Nui), Fiji (Air Pacific), and Hawai’i (Hawaiian Airlines).