Wednesday, December 23, 2009

DOJ Comes Out Against oneworld

The Department of Justice filed comments on Monday opposing a broad grant of antitrust immunity for the oneworld Alliance.  See Joint Application of American Airlines, Inc. et al., Comments of the Department of Justice, Dkt. No. OST-2008-0252 (Dec. 21, 2009) (available here).  From the filing:

Applicants’ proposed agreements would result in competitive harm on certain transatlantic routes serving 2.5 million passengers annually. Fares between six pairs of cities – (1) Boston and London, (2) Chicago and London, (3) Dallas and London, (4) Miami and London, (5) Miami and Madrid, and (6) New York and London – could increase up to 15% under the proposed agreements. The Applicants claim substantial benefits will flow from an expanded alliance, but they have not shown that immunity is necessary to achieve these benefits. Although the proposed alliance agreements may lead to public benefits, Applicants overstate their magnitude and value, particularly in relation to their current unimmunized alliance. We therefore recommend that DOT impose conditions – slot divestitures or carve-outs, as appropriate – on a grant of immunity to protect the public interest in competition.

Id. at 3.

According to a story out today, both American Airlines and British Airways said they would be filing responses shortly.  See Airlines Hit Back at US Criticism of Tie-Up Plans, BBC News, Dec. 23, 2009 (available here).  While the DOT had said it would render a decision on the application at the end of October, it has extended its deadline for new filings into early next year.  Stakeholders now have until January 11, 2010 to comment on the proposal.

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