The European Commission this week said it has opened two competitive reviews of Star and Oneworld airline alliance members separately seeking antitrust immunity on transatlantic routes.
Several carriers from each alliance are in the midst of seeking immunity to "jointly manage schedules, capacity, pricing and revenue management on transatlantic routes, as well as share revenues and sell tickets on these routes without preference between these carriers," EC competition authorities noted. EC said that level of cooperation "appears far more extensive than the general cooperation" among alliance members.
The probe includes "both existing and planned cooperation" among Star Alliance carriers Air Canada, Lufthansa, United Airlines and incoming alliance member Continental Airlines. The U.S. Department of Transportation this month tentatively approved the joint venture.
The EC's second review revolves around a similar arrangement among Oneworld carriers American Airlines, British Airways and Iberia.
Through the review, the EC is "assessing whether these joint activities may lead to restrictions of competition on certain transatlantic routes. In its analysis, the commission will take into consideration any demonstrated consumer benefits which may arise from the parties' cooperation."
The EC described the reviews as a "procedural step," noting that the proceedings do "not imply that the commission has proof of an infringement," the EC said in a memo. "It only signifies that the commission is dealing with the cases as a matter of priority."
Increasing momentum for antitrust-immune airline alliances is sparking industry concern that the consolidation of airline power could alter corporate buyer leverage for negotiating transatlantic deals and force companies into alliance agreements rather than individual carrier arrangements
(BTNonline, April 20).
Assuming approval of pending applications, three clusters of immunized carriers—including the Oneworld and Star joint ventures and the already-approved Delta, Air France, Northwest and KLM joint venture—are poised to control more than 80 percent of the North Atlantic market, DOT data show.
Further along in their venture plans, Delta, along with wholly owned subsidiary Northwest, is working to integrate corporate sales functions with antitrust-immune SkyTeam partners Air France and KLM. Delta and Air France declined to update the corporate contract coordination enabled by last year's approval of antitrust immunity. However, Delta CEO Richard Anderson told
BTN earlier this year that the two carriers would commence joint corporate contracting this month, then fold in the Northwest-KLM piece by year-end
(BTNonline, Jan. 20).
In seeking its own antitrust-immune venture with British Airways and Iberia, American CFO Tom Horton during the carrier's first-quarter earnings call this month said the Oneworld carriers are awaiting a scheduling order from DOT that will kick off a six-month period for public comments and review. "We believe we made a very strong case, and we continue to expect that approval will occur in the second half of this year," Horton said.