DOT OKs More Air Alliances
<H1>DOT OKs More Air Alliances</H1><H3>By Barbara Cook</H3><I>Washington, D.C.</I> - The Department of Transportation seems to have changed its mind about antitrust immunity with a rash of recent approvals for airline agreements.
Even though DOT previously said it would not give the same measure of protection to carrier accords that it gave to Northwest and KLM several years ago, it has issued tentative clearance for a pact among Delta, Sabena, Austrian Airlines and Swissair. In its ruling, DOT noted that the carriers would be able to establish "a network of new pro-competitive and pro-consumer worldwide aviation services." It also signed off on a tentative decision granting antitrust immunity to American Airlines and Canadian Airlines International for their marketing alliance.
Final approval of a sweeping request from United and Lufthansa to allow the carriers, with certain conditions, to expand their alliance, was issued several weeks ago (BTN, May 20). That decision led to the signing of the new U.S.-German open skies agreement during a Milwaukee meeting in May between President Clinton and German Chancellor Helmut Kohl. In addition, an agreement between United and SAS is awaiting DOT approval.
DOT apparently was swayed by the airlines' arguments that without immunity from lawsuits from their competitors, they won't be able to realize the full benefits of open skies accords, which the United States has placed at the top of its list of international aviation goals.
In the Delta agreement, the companies will remain independent entities-just as United and Lufthansa will-but they will be able to operate as if they had concluded a "cross-border merger," a new term that is gaining prominence here. DOT Secretary Federico Peña, who has based the success of the U.S. negotiating posture on a mix of open skies agreements and agreements that are expected to ultimately lead to open skies accords, said the integration of services provided by these four carriers will help to fulfill the administration's foreign trade goals. The U.S. already has open skies agreements with Austria, Belgium and Switzerland.
In the four-carrier decision, DOT recognized that there may be problems with protecting competition in three business travel markets in which the carriers now compete: Atlanta-Brussels, Atlanta-Zurich and Cincinnati-Zurich. Accordingly, DOT requires the carrier alliance to withdraw from all International Air Transport Association fare-setting conferences affecting prices between the United States and Austria, Belgium and Switzerland.
American chairman Robert Crandall praised DOT's tentative approval of the CAI agreement, saying it will allow the U.S.-Canada open skies agreement, signed just over a year ago, "to reach its full potential." He noted that the agreement already has allowed U.S. and Canadian airlines as a group to boost transborder air service by more than 60 percent.
In its decision on the American-CAI application, DOT agreed with arguments posed by Delta and Northwest that immunity should be withheld until all restrictions on flight operations end at Toronto in 1988 and in Montreal and Vancouver in 1997.
However, DOT said, the "very distinct character" of U.S.-Canadian air markets permits more service options than any other international market, and thus made an exception to its policy that an open skies agreement affecting all markets must be in place before it would grant waivers of antitrust laws.
The United-SAS request for antitrust immunity envisions that the carriers will significantly expand their alliance by coordinating routes and schedules, as well as combining sales forces in some areas and establishing joint marketing. The carriers said the changes would take place by Sept. 30, if DOT approves the alliance in time.