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Antitrust-Immunity Bid

Antitrust-immunity bid defended by airlines

Jul 07, 2009

WASHINGTON — Continental, United and eight other airlines say the Justice Department's opposition to their bid for broad antitrust immunity was based on shortsighted analysis that ignored conditions in the airline industry.

The airlines, part of an alliance that Continental plans to join this fall, want immunity to cooperate in setting prices and schedules on international service without violating U.S. antitrust laws. They said in a filing Monday that consumers benefit when airlines can expand their networks through alliances with other carriers.

The decision is in the hands of the Transportation Department, which gave preliminary approval to the immunity request in April.

But the Justice Department weighed in last month, saying that broad, global immunity would drive up fares and reduce competition on some international routes.

It recommended that the Transportation Department approve a scaled-back immunity shield to cover trans-Atlantic routes, but not on all the routes sought by the nine airlines, which make up the Star Alliance, one of three major teams of global carriers.

The airlines said the Justice Department's "radical shift" in policy would hobble them in competing against SkyTeam, a competing alliance led by Delta Air Lines Inc. and Air France, which already has immunity.

The Star Alliance members accused the Justice Department of trying to "substitute a narrowly focused and ill-conceived policy that ignores unique considerations affecting international aviation."

AMR Corp.'s American Airlines, which is separately seeking antitrust immunity to work more closely with British Airways on trans-Atlantic service, also opposed the Justice Department's position. American said a new policy limiting airline alliances "could not come at a worse time."

Airlines have been battered in the past two years, first by rising fuel prices and then a global recession that has undercut travel demand.

The Transportation Department declined to comment on the cases.

Antitrust-immunity bid defended by airlines
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Source: AP

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