Thursday, February 5, 2009

Comments on the New Oberstar Bill

A new posting from The Middle Seat Terminal, the travel blog of The Wall Street Journal, discusses Rep. James Oberstar's proposed legislation which could spell the end of antitrust immunity for alliances such as Star, SkyTeam, and oneworld.  As Matt Phillips--WSJ writer and the blog's lead poster--points out, the proposal alone "[n]o doubt . . . makes carriers with pending requests for antitrust immunity fairly jittery that their petitions will be turned down or delayed."  It's possible (though far from certain) that the U.S. Department of Transportation may tread lightly from here on out in the hopes of assuaging fears that it is has failed to be judicious with its immunization powers.

Continental Airlines, which has an application pending before the DOT to join the Star Alliance, issued the following press statement yesterday:

Continental would be pleased to participate in Chairman Oberstar's proposed study.  However, any further delay in the review of the current ATI applications perpetuates the competitive imbalance that now exists, and we caution against prolonging the current anticompetitive environment.  We are confident DOT will approve our applications to participate in Star Alliance.  It is important for this review to be completed expeditiously so we can provide effective competition to airlines globally, including the world's largest airline, which already operates in an antitrust immunized global alliance with Europe's largest airline.  We agree with Chairman Oberstar that all global alliances need to be treated equally.  This is essential not only to Continental, but to our customers, communities and employees, which is why our ATI application is supported by dozens of members of Congress, mayors, governors and business groups around the country.

The SkyTeam Alliance, which includes Air France-KLM and the recently merged U.S. carriers Delta and Northwest, already enjoys transatlantic antitrust immunity from the DOT.  Until the expanded Star Alliance and oneworld applications are approved, a competitive imbalance exists.  Regardless of the legislative fate of Rep. Oberstar's new bill, the DOT should move forward on approving these applications.  Doing so will enhance competition and allow consumers to reap the benefits while Congress debates the purported merits of turning back the clock on air transport regulation.

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