The European Commission (EC) has won the opening round in its legal challenge against US open skies agreements, although some of the urgency has subsided following the decision by American Airlines and British Airways to abandon their latest bid for antitrust immunity. That effectively shelves the need to rush through US/UK open skies.
A preliminary "opinion" emerged from the European Court at the end of January, supporting the EC's four-year-old complaint that US open skies deals conflict with the single European air market. A full judgement is not expected to follow until after the summer recess, but it is rare for the court to disagree with the opinion of the advocate general.
American and BAhad been rushing to seal a deal ahead of the court decision, but dropped the plans after a ruling by the Department of Transportation (DoT) that BA must relinquish 244 weekly slots at congested London Heathrow as the price for antitrust immunity. The two oneworld partners now plan to push Washington for permission to codeshare under the provisions of the existing Bermuda II bilateral. However, the DoT has not responded to such requests in the past. American and BA, meanwhile, are busy reassuring their partners that oneworld still has a viable future.
However, other alliances could still face a major fallout from the pending European Court decision. A crucial element is the date from which any ruling is applied says John Balfour, partner at London law firm Beaumont & Son. The decision could be enforced only from the day of judgement or from when the EC first complained back in March 1998. However, it could also rule that the bilaterals are simply incompatible with membership of the European Union. The advocate general's opinion already warned that national ownership restrictions conflict with the rights of companies to set up in other member states.
The EC could also revive an investigation into the Lufthansa/United alliance. That was launched at the time of the first American/BA antitrust application in 1998. The case is still open and the EC could now issue a report this year.
Source: Airline Business
