An anti-trust application filed by Oneworld Alliance members has drawn criticism by the US Department of Justice, who believes the proposed tie-up would result in competitive harm in six transatlantic markets.
The Justice Department filed similar comments earlier this year in the anti-trust approval process for members of the Star Alliance, two months after the Department of Transportation awarded tentative approval for the transatlantic venture now in development by Air Canada, Continental Airlines, Lufthansa and United.
In the Oneworld proceeding Justice filed its comments after the deadline established by DOT, but before Transportation officials have issued their ruling on the Oneworld anti-trust application.
American, British Airways and Iberia in 2008 sought approval to form a transatlantic joint venture similar to agreements that are now in place among members of the two competing alliances, SkyTeam and Star. The three Oneworld members are also seeking broader cooperation with Finnair and Royal Jordanian.
The Department of Justice in its comments contends if immunity is granted fares on six transatlantic markets would increase by 15% due to a loss of competition.
Justice believes any anti-trust approval must carry restrictions, explaining remedies include unencumbered slot divestitures, earmarked slot divestures or carve-outs, which are essentially city pairs excluded from immunity.
The Justice Department believes carve-outs are the simplest and most straightforward way to allay anticompetitive concerns despite arguments by the Oneworld members that requiring carve-outs would erode an incentive to increase capacity, reduce their ability to optimise schedules and result in each carrier's respective yield management system placing a higher value on local traffic instead of connecting passengers.
DOT in its final ruling on Star anti-trust immunity did require some carve outs after virtually requiring none in its tentative approval of the joint venture among the alliance partners.
Recently DOT said it was working with Justice cooperatively in the Oneworld approval proceeding, and dismissed any perceived strife between the two agencies stemming from the Star approval process.
Characterising missing a 31 October deadline in ruling on Oneworld anti-trust as "unfortunate", DOT has said it is working double time to complete the review.
Source: Air Transport Intelligence news
