DOT to Deny Airline Alliance Request
Posted on: Thursday, 22 December 2005, 18:00 CST
By JOSHUA FREED
MINNEAPOLIS - The Transportation Department signaled it would deny an antitrust exemption sought by the SkyTeam airline alliance, which includes Northwest Airlines Corp. and Delta Air Lines Inc.
The request was prompted by Northwest's entry into SkyTeam last year after its partner, KLM Royal Dutch Airlines, merged with SkyTeam member Air France. Northwest has antitrust immunity to work closely on routes and pricing with KLM, but not with other SkyTeam members, which also includes Alitalia, Continental Airlines and CSA Czech Airlines.
The DOT said the airlines' routes overlap so much that little new service was likely to result from an antitrust waiver. It did allow codeshare agreements, which make it easier for passengers to book trips on a single ticket with multiple airlines.
"The carriers failed to demonstrate sufficient public benefits that would result from a grant of antitrust immunity to the new alliance," the DOT said.
The department will issue a final decision after the public comment period ends next month. Its preliminary decision on Thursday follows the Justice Department's August objection to the antitrust exemption.
Northwest officials were dismayed.
"They do not address any problems with competition," said Andrea Fischer Newman, Northwest's senior vice president for government affairs. "They're basically requiring an unspecified demonstration of benefits that they've never required in any other case. We are very confused, we are very disappointed."
Transportation spokesman Bill Mosley said he could find no earlier examples of airline antitrust denials, although he said two that were approved never took effect because the airlines didn't meet the conditions DOT imposed.
Northwest had said it might have to reduce or eliminate trans-Atlantic flights without antitrust immunity. Its hub in Amsterdam is part of its close ties with KLM. Fischer Newman said on Thursday that it's too soon to know what the impact will be.
AMR Corp.'s American Airlines had also argued against antitrust immunity.
Source: Associated Press/AP Online
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