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American Airlines Global Alliance

American Airlines global alliance soon to be OK'd?  May 10, 2009

WASHINGTON – The U.S. Department of Transportation looks poised to approve antitrust immunity for American Airlines' alliance with British Airways, Iberia and other carriers.

"These alliances are life savers for airlines," Transportation Secretary Ray LaHood said Friday. "That is the premise from which we start. We believe it. The airlines believe it. And so we are going to continue to pursue those kinds of opportunities where we have them."

Two other global alliances have antitrust immunity, allowing them to cooperate on schedules, fares and cargo prices.

House Democrats are much more skeptical than LaHood of airline alliances, saying they are anti-competitive and drive up prices for international routes. Minnesota Rep. Jim Oberstar, chairman of the House Transportation and Infrastructure Committee, has said immunized alliances amount to a "de facto merger" of airlines.

American says alliances have resulted in more trans-Atlantic service and better frequent-flier benefits for travelers.

Legislation to fund the Federal Aviation Administration passed Oberstar's committee in March and included a provision that would retire existing antitrust exemptions after three years. It also would direct government auditors to study whether such alliances have hurt competition and whether applications should be subject to a merger analysis by the Department of Justice.

However, LaHood on Friday supported the idea that alliances are needed to achieve efficiencies in today's market. Last month, his department proposed to grant antitrust immunity to Continental Airlines for its participation in the Star Alliance, which includes United Airlines, Air Canada and Lufthansa Airlines.

"When I called the chairmen of United and Continental and told them our department was going to move ahead with their alliance, you know what they said?" La Hood said. " 'This is a life saver for us.' "

Parties interested in the Oneworld application have until May 18 to submit comments about it. American and British Airways have until May 28 to respond. The department would make a preliminary ruling after that and has until Oct. 31 to issue a final ruling.

The European Union recently began investigating the Oneworld and Star alliances for possible violations of antitrust rules.

American Airlines global alliance soon to be OK'd?

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