DoT Gives Green Light To US-Japan Air Alliance

by Mike Godfrey, Tax-News.com, Washington

11 October 2010

The US Department of Transportation (DOT) on October 6 proposed to grant antitrust immunity to two air carrier alliances for services between the United States and Japan, subject to the Open-Skies aviation agreement between the two countries being signed.

The Department’s tentative decision would grant immunity to “oneworld” alliance members American Airlines and Japan Airlines, and separately to “Star Alliance” members United Airlines, Continental Airlines and All Nippon Airways. If the decision is made final, the members of each alliance would be able to more closely coordinate international operations in transpacific markets.

In October 6’s show-cause order, the Department tentatively found that granting antitrust immunity to each alliance would provide passengers and cargo with a variety of benefits, including lower fares on more routes, increased services, better schedules, and reduced travel and connection times. Each proposed alliance would enhance competition, particularly in transpacific markets.

On December 11, 2009, the United States and Japan initialed an agreement that would establish an Open-Skies aviation relationship between the two countries once it is signed. Under the new agreement, airlines from both countries would be allowed to select routes and destinations based on consumer demand for both passenger and cargo services, without limitations on the number of US or Japanese carriers that can fly between the two countries or the number of flights they can operate.

The Department is to review any comments during a 21-day period, and will then publish a final decision.

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