Halt Monopolistic Mergers, Airline Group Chief Says

The new president of the International Air Transport Assn. said governments must stop airline takeovers that create “monopolistic conditions.”

Moehammad Soeparno said many of the world’s smaller carriers worry about airline mergers, fearing that they will be unable to compete with larger and stronger carriers.

He praised the Transportation Department for recently ordering a Dutch airline to lower its investment in Northwest Airlines, saying it “acted to avoid a monopolistic situation.”

The Transportation Department recently ordered KLM Royal Dutch Airlines to reduce its equity contribution to $175 million from $400 million because the larger stake appeared to give KLM too much control over Northwest. KLM helped Los Angeles investor Alfred A. Checchi buy Northwest in June.

Soeparno discussed airline mergers during an interview in Los Angeles, where he stopped last week as part of a world tour as president of IATA, the trade association for international airlines. He also is president of state-owned Garuda Indonesia Airlines.

Soeparno said he saw nothing wrong with the proliferation of marketing alliances between airlines. Such partnerships, often involving frequent-flier programs and joint advertising, help airlines attract more passengers but allow the partners to remain independent.

“I favor cooperation, not mergers,” he said.

Soeparno said Trans World Airlines approached Garuda about forming a marketing partnership, and he is interested. TWA’s routes in the United States and Europe would compliment Garuda’s Asian network, he said. “We would like to explore the possibility with them.”

However, Soeparno said the overture from TWA was preliminary and that no discussions are expected soon.

An alliance with TWA would be Garuda’s first with a U.S. carrier. The Indonesian airline has partnerships with two European carriers, KLM and Lufthansa German Airlines. TWA has frequent-flier relationships with Philippine Airlines and Air New Zealand.

Soeparno said Garuda wants to expand its presence in the United States, and plans to seek U.S. government permission to land in New York.