June 18, 2010
Transpacific Alliances Going Forward
Several news outlets are reporting that Japan's primary air carriers, ANA and JAL, are pressing ahead with plans for deeper integration with the Star and oneworld alliances, respectively. See Yoshio Takahashi, Filed ATI Application with Japan Govt on United, Continental Joint Ops, Dow Jones Newswires, June 18, 2010 (available here); Yoshio Takahashi, JAL Submits Anti-Trust Immunity Application on Ties with American Airlines, Dow Jones Newswires, June 18, 2010 (available here). Both applications have been filed with Japan's Transport Ministry, though neither story offered a timetable on when a decision would be reached.
Winning antitrust immunity from Japanese regulators is only half of the equation for both joint ventures. The U.S. Department of Transportation has to make an antitrust immunity determination as well. Given how protracted the recently concluded oneworld Alliance proceeding was, it's hard to speculate when the DOT will reach a decision in the matter. Besides the protest both applications are likely to receive from the Justice Department's Antitrust Division, there are two additional complicating factors to consider.
First, with respect to the ANA/United/Continental application, it's unclear what impact the pending United/Continental merger will have on the DOT's analysis. Will the DOT wait until the merger is cleared before deciding on whether or not to grant antitrust immunity? Arguably the merger shouldn't be a factor. Continental and United are already allowed to cooperate on international services as part of the antitrust immunity they received in 2009 to cooperate with the Star Alliance's European airlines. More importantly, the merger is not expected to substantially reduce competition since the two airlines have complementary rather than overlapping route networks. Even so, the DOT may wish to avoid the appearance of "jumping the gun" on rendering a decision before the DOJ concludes its pre-merger review.
Second, with respect to the JAL/American Airlines application, JAL is still in the midst of bankruptcy reorganization. It will be difficult for the DOT to make a proper assessment of the potential harms and benefits of the alliance until it knows for certain what JAL will look like after its restructuring.
June 16, 2010
House Committee Hearings on United/Continental
The House Committee on Transportation and Infrastructure held a hearing today on the pending United/Continental merger. Streaming video of the proceedings, along with written transcripts of witness testimony, are available from the Committee's website here.
June 15, 2010
Bangkok Airways Limited
Blog readers interested in the Asia-Pacific aviation market may be interested to read Worata Kongseanitsara & I.M. Pandey's working paper, Bangkok Airways Limited (June 4, 2010) (available from SSRN here). From the abstract:
Bangkok Airways Limited, started in 1967, is a leading private sector air transport company in Thailand. It is still fully controlled and led by the founder who follows a centralized decision making. The operations of the company are highly capital intensive. It is the only airline, perhaps in the world, which has its own airports. Now, the company has grown in size, has enlarged operations and faces competition. It has plans for significant capital investments in the future. The challenge before the owner-manager is to evolve a capital budgeting system and process which is based on an organization structure which facilitates the involvement of executives in decision making and is linked to the company’s strategy and performance and control system.
The Right to Life Between Absolute and Proportional Protection
Though only indirectly related to aviation, blog readers may still be interested in Kai Möller's The Right to Life Between Absolute and Proportional Protection (LSE Legal Studies Working Paper No. 13/2010, June 4, 2010) (available from SSRN here). From the abstract:
One of the puzzles of human and constitutional rights law is whether there are any rights which are absolute. The question is important not only for practical purposes but also for the theory of human and constitutional rights: an absolute right presents a departure from what is now the ‘default’ in constitutional and human rights law around the world, namely the proportionality approach according to which an interference with a right is justified if it serves a legitimate goal and is proportionate to that goal. This paper tries to shed some light on the issue by focusing on the right to life. It proceeds by first presenting an account of the leading case in this area, namely the judgment of the German Federal Constitutional Court in the Aviation Security Act case, where the Court held that shooting down an airplane which was likely to be used as a terrorist weapon was a violation of the right to life in conjunction with the human dignity of the innocent passengers aboard. It then offers a few thoughts on the Court’s reasoning, specifically with regard to what it has to say about the idea of absolute rights. Having concluded that the judgment offers little help in illuminating this problem, it presents some approaches to absolute rights from moral philosophy and applies them to human and constitutional rights law. The conclusion is that the right to life will under certain circumstances be absolute or near-absolute, but that these circumstances occur less frequently than is sometimes assumed.
June 13, 2010
BA/Iberia Antitrust Review Underway
It was reported last Friday that the European Commission has set July 15, 2010 as the provisional date for concluding its investigation of the proposed British Airways/Iberia merger. See Peppi Kiviniemi, EU Begins Probing BA/Iberia Merger Plans, Dow Jones Newswires, June 11, 2010 (available here). From the story:
Concerned that the deal may create monopolies on certain routes the commission, Europe's highest antitrust authority, has already sent a questionnaire to competitors querying whether they see any issues with the merger, according to a person familiar with the questionnaire.
Main routes under scrutiny concern flights between London to Madrid, London to Barcelona and London to Malaga the person said. In addition the commission is asking questions about some 20 indirect routes. The commission is also asking about the likelihood of passengers being willing to substitute close-by airports with each other, to see whether instead of flying directly to Barcelona passengers might be happy to board a flight that lands close to Girona, the person added.
Brussels lawyers following the airline industry closely say that it is likely the commission has its eye on gaining some concessions from the airlines before clearing the deal.
The deal is expected to make the combined airline the third largest in Europe by revenue. It will also mark another step toward a sustainable air transport market in the EU. Since the finalization of a common aviation market in the 1990s, the Union has seen numerous crossborder consolidations, including the landmark Air France-KLM tie-up and Lufthansa's acquisitions of Austrian Airlines, bmi, and Swiss.