Continental Airlines and its Star Alliance partners-to-be this week countered U.S. Department of Justice criticism of their antitrust immunity application and requested prompt finalization of April's tentative approval.
The decision now rests with the U.S. Department of Transportation, which the joint applicants in a filing dated July 6 implored to "reject the conditions on immunity DOJ proposed." A DOT spokesperson this week said the "record is complete," and DOT intends to "issue a final decision as soon as possible."
Continental last year laid out its plan to leave SkyTeam and tightly align with nine Star carriers through the immunity request, which was fortified by a proposed joint venture with Air Canada, Lufthansa and United
(BTNonline, June 30, 2008). Continental said it plans to withdraw from SkyTeam on Oct. 25 to become a tightly aligned, antitrust-immune Star Alliance member.
After DOT's tentative approval for antitrust immunity in April, the Justice Department sought to weigh in on the matter, delaying a May 31 deadline for DOT's final order. In comments published late last month, DOJ blasted the immunity request and asked DOT to amend its tentative approval
(BTNonline, June 29).
In its comments DOJ noted that the Transportation Department "should deny the broad requested immunity and instead grant a more limited immunity," claiming the tentative approval as it stands would reduce competition, raise fares, seep into domestic markets and offer little in the way of consumer benefits. DOJ proposed carving out some transatlantic markets from antitrust immunity, while asking DOT to reject unbridled cooperation between Continental and United on Latin American and transpacific routes.
Star carriers aren't the only ones telling the DOJ to back off. American Airlines in a regulatory filing this week raised concerns that the U.S. Justice Department's recent involvement in airline antitrust proceedings could result in lopsided transatlantic aviation competition. American said, "We have serious concerns about DOJ's request that the Department depart from the precedent set" in the approval of antitrust immunity for several SkyTeam carriers last year
(BTNonline, April 10, 2008).
Concerned about DOJ's stance regarding antitrust immunity—as it relates to the Star case, but also to the carrier's own quest for immunity approval with British Airways and Iberia, still awaiting a DOT decision
(BTNonline, Aug. 14, 2008)—American said, "The lack of consistent grants of antitrust immunity would distort competition among Star, SkyTeam and Oneworld," as authorities allow SkyTeam to "fully integrate," Star to "partially integrate, leaving Oneworld without any transatlantic integration."
In the filing, American argues that applying different standards to each alliance denies consumers the competition DOJ ostensibly is seeking to preserve. American also said that "changing course on immunized alliances would place existing—and future—open skies agreements in jeopardy," noting European constituents—particularly those in Spain and the United Kingdom, home to American's would-be immunized partners—regard the first-phase agreement as "one-sided in favor of U.S. carriers."
American notes in the filing, "DOJ appears misinformed about the current state of interalliance competition," particularly regarding the degree to which American and BA already cooperate on codesharing, frequent flyer benefits, airfares and joint corporate contracting, noting the two carriers don't offer such services jointly on a "comprehensive level," nor would they be able to without immunity.
"While DOJ's comments appear to claim that all alliances are equal in their ability to compete for transatlantic traffic, the reality is that some are now more equal than others," American concludes, noting that, "It is important for the Department to apply consistent decisional standards in its adjudicatory proceedings. Ruling on one application inconsistently with the others would tip the scales and deny consumers the benefits of full interalliance competition."