Friday, November 20, 2009

An Interesting Read From the oneworld Docket

Despite the Department of Transportation's promise to render a decision by October 30, the oneworld Alliance's antitrust immunity docket continues to swell with new filings.  On Monday, Virgin Atlantic let loose another volley of criticism at the proposed link-up, comparing recent statements made by American Airlines CEO Gerard Arpey concerning slot scarcity at Tokyo's Narita Airport to the current situation at London Heathrow.  See Motion for Leave to File and Supplemental Comments of Virgin Atlantic Airways, Dkt. No. OST-2008-0252 (Nov. 16, 2009) (available here).  Not surprisingly, the oneworld Alliance returned fire:

Virgin attempts to compare Heathrow slots to Narita slots, yet omits the key fact - there is a vibrant secondary market for slots at Heathrow. It is hard to see how Virgin can argue that new entrants lack access to Heathrow when five new carriers launched more than a dozen new flights to the US immediately upon US-EU Open Skies taking effect. Virgin should also explain how it does not have an adequate number of Heathrow slots to operate its desired schedule when it is leasing a number of them to Aer Lingus. In fact, on the same day Virgin filed its motion, The Times reported that "the world’s leading airlines have expressed little to no interest" in bmi’s Heathrow slots, including Virgin Atlantic.

Completely ignored by Virgin is the fundamentally different impact the Proposed Alliance and Delta/JAL would have on interalliance competition. If JAL joined SkyTeam, consumers would be faced with yet another Star/SkyTeam duopoly – controlling 92% of US-Japan bookings. Such an alliance would eliminate the existing US-Asia competition between SkyTeam’s hubs at Narita (Delta) and Seoul (Korean) and JAL. In contrast, the Proposed Alliance would account for just 40% of US-UK bookings, and even together with Star the two hub networks at Heathrow will account for just 54%. And unlike SkyTeam - which already has two integrated Asian hubs, oneworld today has none. There is simply no comparison between the Proposed Alliance (which will add to interalliance competition) and JAL joining SkyTeam (which would reduce such competition).

Joint Applicants' Answer to Virgin Atlantic's Unauthorized Motion and Supplemental Comments, at 1-2, Dkt. No. OST-2008-0252 (Nov. 18, 2009) (available here).

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