# The Cartels Running Up Transatlantic Airfares Source: https://www.youtube.com/watch?v=XcbAhYQ49_U Recap page: https://rapidrecap.app/video/XcbAhYQ49_U Generated: 2026-01-27T16:16:34.828+00:00 --- ## Quick Overview The high airfares on the lucrative North Atlantic aviation market stem from the fact that European and American regulators have legally approved cartels, known as joint ventures, among major airlines, effectively eliminating competition and allowing these entities to fix prices and coordinate schedules, which contrasts sharply with non-immunized partnerships that maintain price competition. **Key Points:** - Three major transatlantic joint ventures—United/Lufthansa, Delta/Air France/KLM/Virgin Atlantic, and American/BA/Iberia/etc.—control 75% of all Europe-bound flights from New York, acting as single colluding entities. - These airlines operate under exemptions from antitrust law, specifically referencing Article 101 of the EU treaty that prohibits price fixing, because European and American regulators grant antitrust immunity based on purported public benefits. - The stated public benefit justifying immunity, such as improved network reach for connecting smaller cities, was often already implemented by airlines before receiving approval, as demonstrated by United and Lufthansa coordinating networks in 1993 before applying for immunity in 1996. - Non-immunized partnerships, like American's with Qatar Airways or United's with Emirates, demonstrate that network integration and schedule coordination can be achieved without antitrust immunity, resulting in genuine price competition on routes. - Analysis of Italian and Spanish routes shows a clear economic trend: the more competition a route has (e.g., multiple carriers), the lower the airfares, suggesting consolidation due to immunity increases pricing power and overall fares. - Dominant carriers leverage their immunized positions to aggressively drive out competition; for example, British Airways' parent company IAG launched matching routes against low-cost carrier Norwegian Air Shuttle until Norwegian's long-haul operations ceased. - Regulators appear to be approving new antitrust immunity waivers based on precedent rather than public benefit necessity, following a logic of 'that's the way it's always been done,' which harms consumers. **Context:** The video analyzes the North Atlantic aviation market, the world's largest long-haul market connecting Europe and North America, noting that despite the appearance of 33 airlines flying 126 routes from New York to Europe, the market is dominated by a few massive, colluding airline alliances operating under legally sanctioned antitrust immunity waivers granted by US and European regulators. ## Detailed Analysis The North Atlantic market looks competitive on the surface, but major airlines operate within three dominant, legally approved cartels: the United/Lufthansa group, the Delta/Air France/KLM/Virgin Atlantic group, and the American/BA/Iberia group, which together control 75% of flights from New York to Europe. These joint ventures coordinate schedules and fix prices, sharing transatlantic revenue according to their agreements, a practice that explicitly violates standard antitrust law (Article 101 of the EU treaty) but is permitted via regulatory exemption. The justification for this immunity is that the collusion creates public benefits, such as expanding network connectivity to smaller markets, but evidence suggests this benefit was often realized before immunity was granted, as seen with United and Lufthansa commencing network integration years before their 1996 approval. Furthermore, airlines like American (with Qatar) and United (with Emirates) maintain deep, non-immunized partnerships that offer network benefits while preserving price competition, suggesting immunity is not strictly necessary for network expansion. Economic data from specific routes to Italy and Spain confirms that routes with fewer competitors exhibit significantly higher fares, implying the legalized cartel structure grants airlines greater pricing power, leading to higher overall transatlantic costs, which are noted by carriers like Lufthansa and British Airways as their 'core profit pool.' This consolidation also enables dominant players to aggressively suppress genuine competition, exemplified by British Airways launching retaliatory routes against Norwegian Air Shuttle until the low-cost carrier exited the long-haul market, demonstrating the anti-competitive leverage provided by market dominance. ### Market Structure and Collusion - The North Atlantic market appears competitive but is dominated by three joint ventures controlling 75% of NY-Europe flights - These groups act as single airlines, fixing prices and coordinating services under regulatory approval - Brussels Airlines and United, for example, charge identical prices for parallel routes. ### Antitrust Immunity Rationale vs. Reality - Regulators exempt airlines based on public benefit, such as expanding service to smaller destinations - United and Lufthansa began network integration in 1993 but applied for antitrust immunity in 1996, arguing it was necessary for the already existing cooperation. ### Evidence of Non-Immunized Competition - American Airlines' partnership with Qatar Airways and United's with Emirates function similarly to immunized JVs (network integration, through ticketing) but maintain competition, offering passengers different itineraries and prices. ### Economic Impact of Consolidation - Analysis of August airfares to Italian and Spanish destinations shows that routes with fewer competitors have demonstrably higher airfares - This indicates that reduced competition due to joint ventures grants airlines stronger pricing power, leading to higher profits and consumer costs. ### Anti-Competitive Tactics - Dominant carriers leverage their structure to eliminate threats; IAG matched Norwegian's route launches to key destinations like Oakland and Fort Lauderdale until Norwegian ceased long-haul operations, proving the intent was to bleed the competitor dry. ### Regulatory Failure - Regulators appear to grant new antitrust immunity waivers based on existing precedent rather than proving new public benefits, effectively institutionalizing collusion and harming consumers who face inflated transatlantic airfares.