The SkyTeam alliance was dealt a significant regulatory setback with a US denial of antitrust immunity sought by its European core members and two of its three US flag carriers partners.
The US Department of Transportation (DoT) said it would not grant the pricing power freedoms to Delta Air Lines and Northwest Airlines, which had sought it jointly with the Air France/KLM group along with Alitalia and CSA Czech Airlines. The third US SkyTeam member, Continental, had not applied for the antitrust immunity, which would essentially have expanded a pricing exemption shared since 1993 by KLM and Northwest. Their joint venture partnership is worth about $1 billion in annual revenue to Northwest.
With Air France’s acquisition of KLM in 2004, Northwest argued it needed antitrust immunity to take advantage of its relationship with Air France, a lead member of SkyTeam. Northwest also claims it needs an antitrust-protected relationship with the other SkyTeam members to develop its transatlantic presence.
The case was debated as European and US negotiations toward a liberalised transatlantic aviation regime progressed, and that fact coloured the arguments. As American noted, it has no antitrust immunity with oneworld partner British Airways. In the SkyTeam case, US regulators for the first time faced a request from two major US flag carriers for such protection.
The Transportation regulators held that the substantially increased consumer benefits to merit the immunity had not been demonstrated. They said the airlines had already integrated services to a large extent and do not need the legal status to integrate them further, “even though they may not co-ordinate their services and fares as much as they would with antitrust immunity”.
Air France/KLM says immunity would be a “logical complement to the tentative agreement that was reached between the USA and the European Union on a transatlantic liberalised market”. Northwest’s senior vice-president of government affairs, Andrea Fischer Newman, says the decision “would not help” Northwest’s efforts to reorganise in bankruptcy.
The SkyTeam carriers said they might request the immunity again at a later date, but until then they would seek a blanket codeshare that the authorities said was acceptable. ■
DAVID FIELD / WASHINGTON
Source: Airline Business
