With all nine European countries signed up to open skies agreements with the US, Washington has completed a key part of its international aviation policy announced last November. But the fallout could have serious repercussions for the European Commission's attempts to win an external negotiating mandate with the US, in an anticipated rush to gain anti-trust immunity for transatlantic alliances.
Belgium became the final country to sign up to the G9 open skies agreements in early September. Before this in mid-August, SAS had already applied for significant new rights to the US and beyond as a result of similar accords signed by its three owner governments. But the main event came only days after the Belgium agreement, when Delta Air Lines submitted an application for anti-trust immunity in its four-sided alliance with Swissair, Austrian and Sabena.
Anti-trust immunity has been a highly successful part of Northwest Airlines' partnership with KLM, and as codesharing has grown so has the desire of other transatlantic alliances to obtain the clearance. Delta is planning to integrate flight schedules, advertising, and cargo and pricing initiatives, while linking systems that will create 'a multi-hub intercontinental network.'
But authority must still be granted from both the transportation and justice departments in the US and the European Commission. US approval seems likely: the four-carrier alliance appears to meet the criteria laid down in the Department of Justice's formula which determines if anti-trust immunity would be anti-competitive.
But clearance from the Commission may not be guaranteed. There is some concern in Washington that Brussels could block the application by raising concerns on how immunity for the alliance would affect the internal European market.
But the biggest problem for the Commission may yet come from Germany, where economic reality appears to be catching up on political expediency. Bonn has already suggested that it may pursue open skies with the US independently, if Lufthansa's alliance with United is awarded antitrust immunity. As one of the main supporters of Brussels' push for external competence this would come as a severe blow to Brussels. 'It is obviously something I am watching closely,' says one senior Commission official.
And the really bad news for Brussels is that US officials are trying to encourage Bonn in that direction, by suggesting that the more alliances with anti-trust immunity, the less likely is approval of later applications as concentration builds in the market. 'The imperative is not to be the last guy in. The first bunch of airlines has an easier economic analysis to present than the later pairs.'
Source: Airline Business
