Still Awaiting DOT Okay, CO Plans To Launch Three-Way In 3Q

Continental Airlines CEO Gordon Bethune today said the carrier, along with partner Northwest Airlines and would-be partner Delta Air Lines, will "begin implementing the alliance in the third quarter."

"The proposed alliance is pro-competition and provides additional scope for all customers," Bethune told reporters during a conference call. He, along with fellow CEOs Richard Anderson of Northwest and Leo Mullin of Delta, have expressed disappointment in the lengthy ongoing review of the alliance by the U.S. Department of Transportation.

DOT is expected to make a decision this week. It has until Jan. 21 either to permit the proposed pact, formally object to it or extend the review by another 30 days for a fifth and final time.

In recent interviews with Business Travel News, both Anderson and Mullin said they are willing to accept "carve-outs," certain routes on which the carriers would be barred from working cooperatively due to competitive concerns.

"To not allow us to go forward would be inconsistent with the law and previous precedent at DOT and the Department of Justice," Anderson said, citing approval of the new United Airlines/US Airways marketing and codeshare agreement and Northwest's existing bilateral alliance with Continental. "I hope regulators do not want to revert back to Civil Aeronautics Board days of protecting competitors rather than competition."

In testimony at a Senate Commerce, Science and Transportation Committee hearing last week, Anderson added, "We are not asking for special treatment, only that the federal government provide equitable treatment, particularly in view of the extreme importance of the marketing agreement as part of our recovery plan."

Sources indicated the three carriers already are preparing a unified front to discuss alliance benefits with corporate travel buyers. "There is no doubt that is the direction they are headed," said Bill Hubric, vice president of Management Alternatives. "They are out on the street talking about it."

Several smaller carriers have lobbied against the three-way agreement, arguing it would impede competition.

Airlines overseas also are monitoring the situation. "We are watching with interest to see what Washington decides to do," said British Airways CEO Rod Eddington in a BTN interview this morning. "Those three substantial carriers working together on the North Atlantic would present competitive challenges for all of us."

BA and Oneworld partner American Airlines expect DOT to approve beyond-hub codesharing proposed in November.