Saturday, January 02, 2010

Justice Department Suggests Modifications to Airline Alliance

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

The Department of Justice has sent comments to the Department of Transportation, suggesting that an application of antitrust immunity for an airline alliance involving American Airlines, Inc., British Airways PLC, Iberia Lineas Aereas De Espana, S.A., and other carriers should be conditioned on “slot divestitures or carveouts, as appropriate.”

American, British Airways, and Iberia recently applied to the U.S. and European Union authorities for permission to cooperate more closely on transatlantic flights through the creation of a joint business agreement.

The “oneworld alliance” members have asserted that the benefits of the proposed agreements justify unrestricted immunity and that any carve-out would jeopardize the alliance.

According to the Justice Department's December 21, 2009, comments, a grant of unrestricted immunity would likely result in significant competitive harm in six transatlantic markets where American currently competes with British Airways and Iberia.

The Justice Department suggests that fares could increase by as much as 15 percent between six pairs of cities: (1) Boston and London, (2) Chicago and London, (3) Dallas and London, (4) Miami and London, (5) Miami and Madrid, and (6) New York and London.

Text of the comments of the Department of Justice appears here on the Antitrust Division’s web site.

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