DOT Proposes to Approve Expanded Transatlantic Alliance Involving Delta, Northwest
Source: U.S. Department of Transportation
Apr 10, 2008 - 9:57:20 AM
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The U.S. Department of Transportation (DOT) today proposed to allow Delta Air
Lines, Northwest Airlines and four of their international partners in the
SkyTeam alliance to combine their existing transatlantic alliances.
In a
show-cause order issued today, the Department tentatively decided to grant
antitrust immunity and allow the two U.S. carriers, along with Air France,
Alitalia, Czech Airlines and KLM Royal Dutch Airlines, to coordinate their
services and act as a single carrier for U.S.-Europe services. Northwest has an
existing alliance with KLM, while Delta has an existing alliance with Air
France, Alitalia and Czech Airlines.
The Department tentatively
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, such as lower fares and more nonstop and connecting flights. The United
States has an Open-Skies Plus aviation agreement with the European Union (EU).
Each of the international carriers involved in today’s decision is from an EU
member state. The U.S.-EU agreement assures that transatlantic markets remain
open to other competitors because U.S. and European airlines are now able to
serve any route between the United States and Europe.
As a condition of
obtaining antitrust immunity, the Department proposed to require that the
carriers implement the immunized alliance within 18 months. The Department
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 benefited the public and did
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.
Interested parties will have two weeks to comment on
today’s tentative decision. The parties will reply to all comments within seven
days and the Department will then issue a final decision. The show-cause order,
alliance application and public comments are available on the Internet at http://www.regulations.gov, docket number
OST-2007-28644.
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