DOT approves Delta’s four-way joint venture without Alitalia

The US Department of Transportation has formally approved the joint venture proposed by Delta Air Lines, Air France, KLM and Virgin Atlantic Airways, tentatively approved in August, while agreeing with opponents of the collaboration that Alitalia would definitely not be included under the deal.

Delta previously had a joint venture with Air France, KLM and Alitalia, and another with Virgin Atlantic. They argued that this new collaboration, including antitrust immunity (ATI), would enable the airlines to better coordinate their operations between the US and Europe.

“The approved alliance will remove the existing gaps preventing full coordination between Delta’s two existing immunised parallel joint ventures with Virgin on the one hand, and Air France/KLM on the other,” the DOT’s document, dated 14 November, says. The approval also revokes DOT’s previous grant of antitrust-immunity to the three airlines and to CSA Czech Airlines and Alitalia after six months.

In July 2018, Delta, Air France, KLM and Virgin Atlantic had filed for approval of the amended joint venture that excluded financially troubled Alitalia, but the airlines requested to keep a back door open to allow the Italian flag carrier back into the group at an unspecified later date.

Opponents of that plan included JetBlue Airways, which argued that the deal “would reduce and foreclose” competition on US-Europe routes.

In comments after the tentative approval in August, JetBlue said that the request to add another carrier at a later date “is legally impermissible and procedurally invalid”.

“The Joint Applicants scarcely mentioned Alitalia throughout the course of this proceeding, yet now, at the proverbial last minute, after publication of a show cause order, request that ATI be extended to Alitalia even though Alitalia was not a named party to the original 2018 request and no Alitalia legal representative signed the submission,” JetBlue’s response read.

Alitalia is in the midst of a labor disagreement with its pilots and cabin crew, as it struggles to secure investment and capital to turn the failing airline around. A group of investors and the Italian government are in talks to develop a plan for the loss-making carrier, but several hurdles, such as disagreements over how much capital to inject, have still to be overcome.

JetBlue said in its comments that if the group wishes to collaborate with Alitalia in the future, they must submit a new application, and allow DOT to conduct a new and thorough review at that time. The DOT agreed with JetBlue’s assessment.

“Once the Amended JVA becomes effective, the preceding agreements that outlined Alitalia’s cooperation with the other parties will cease to exist, removing the underlying predicate for immunity,” the order states. “The Department is aware that Delta is seeking to reach commercial terms with Alitalia to continue cooperation under the Amended JVA; however, the Joint Applicants’ request to include Alitalia in its revised joint venture is premature,” it says.

“If the Joint Applicants and Alitalia come to a commercial agreement before the six-month wind-down period expires, they may petition the Department to extend the immunity at that time and the Department will evaluate the request in the docket with all due process,” the DOT says in its final approval.