DOT Denies Antitrust Exemption for Airline Alliance

By Bloomberg, AP and Staff Reports

The U.S. Department of Transportation signaled Thursday that it will 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 include 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 code-share 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,” DOT said.

DOT 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.”

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.