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US Transport Department Approves Expanded Transatlantic Airline Alliance

by Glen Shapiro LawAndTax-News.com, New York

02 June 2008


The US Department of Transportation (DOT) has announced that it will grant antitrust immunity to Delta Air Lines, Northwest Airlines, and four of their international partners to combine their transatlantic operations in an expanded SkyTeam alliance.

The Department’s granting of antitrust immunity allows the two US carriers, along with Air France, Alitalia, Czech Airlines and KLM Royal Dutch Airlines, to coordinate their transatlantic fares, services and capacity as if they were a single carrier in these markets, subject to certain conditions.

Northwest has an existing alliance with KLM, while Delta has an existing alliance with Air France, Alitalia and Czech Airlines.

The recent action, which makes final the tentative decision issued 9th April, does not affect Delta’s and Northwest’s ongoing plans to merge. The merger plans are subject to a separate antitrust review by the Department of Justice.

In approving antitrust immunity, the Department concluded that the proposed alliance is in the public interest because it features a proposed new and highly integrated joint venture that will likely produce efficiencies, and provide consumers with additional price and service options.

The United States has negotiated an Open-Skies Plus aviation agreement with the European Union (EU). The US-EU agreement provides that transatlantic markets remain open to other competitors because US and European airlines are now able to serve any route between the United States and Europe.

The Department noted that the carriers have not yet put into place the joint venture upon which many of the public benefits of antitrust immunity would depend.

For this reason, the Department required the carriers to fully implement the proposed alliance within 18 months as a condition of retaining immunity. The Department also stressed that the carriers would remain subject to antitrust laws for domestic service and for international flights that are not covered by the alliance agreement.

Beginning with the Northwest-KLM alliance, which was approved in 1993, the DOT has granted antitrust immunity to a number of international airline alliances where it found that the alliance would benefit the public, and would not substantially reduce competition.

Delta and Northwest first petitioned the Department to allow the alliance in 2004. After an initial tentative denial, they reapplied in June of last year with a substantially revised agreement.


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