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Business

US approves British Airways - American Airlines alliance expansion

Text by News Wires

Latest update : 2010-02-15

The US Department of Transportation proposed granting antitrust immunity to American Airlines and its global "oneworld" alliance partners. The Department acknowledged that immunity could harm competition on transatlantic routes.

AFP - The US Department of Transportation said Saturday it proposed granting antitrust immunity to American Airlines and its global "oneworld" alliance partners including British Airways.

The Department said the proposed alliance would enhance competition in the airline industry "by creating competition with the existing Star Alliance and the SkyTeam alliance, which already have been granted immunity."

If approval is granted, American and "oneworld" alliance partners British Airways, Iberia Airlines, Finnair and Royal Jordanian Airlines "would be able to more closely coordinate international operations in transatlantic markets," the DOT said in a statement.

The Department acknowledged that immunity could harm competition on select routes between the United States and London's Heathrow Airport, because landing and takeoff slots were limited there.

"As a condition of approval, the Department is proposing in its show-cause order that the applicants make four pairs of slots available to competitors for new US-Heathrow service," the department said.

The US Justice Department said late last year that a tie-up of British Airways and American Airlines for transatlantic flights would lead to "competitive harm" and called for restrictions on the deal.

The Justice Department's antitrust division made its recommendation to the DOT, that still has to make the final ruling on the matter.

The request for antitrust immunity "would result in competitive harm on certain transatlantic routes serving 2.5 million passengers annually," the Justice Department said in December.

It concluded that fares between six transatlantic routes "could increase up to 15 percent 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," the review said.

The report recommended that the DOT "impose conditions" including removal of some slots for the affected carriers "to protect the public interest in competition."

It said any immunity might also include a "carveout" of some routes that would not be included in any cooperation.

"A joint venture is likely to harm competition if it would increase the participants' ability or incentive to r

Date created : 2010-02-14

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