Skyteam’s ambitious bid for broad granting of antitrust immunity for five of its members – including two of the largest US airlines — faces a major obstacle. The antitrust unit of the US Justice Department has recommended against allowing Delta and Northwest Airlines to share pricing immunity with Air France/KLM, and with Alitalia and Czech Airlines. 

The antitrust opinion is a recommendation to the Transportation Department (DoT), which makes the final decision — but which by law gives much consideration to the Antitrust comments. The DoT has said it plans to rule on the case by the end of this year.

This opposition is significant in that the domestic US effects of the immunity weighed heavily in the conclusions by the Justice unit — which has routinely granted immunity to international alliances that were “end-to-end” rather than “overlapping” as here. Here, Antitrust said, the requested immunity may “harm domestic competition by providing cover for competitors to discuss competitive matters outside the immunity and shielding anticompetitive conduct from antitrust enforcement”.

It says that that on average 8% of passengers on Delta-operated domestic flights were on international itineraries and so likely on alliance flights, while for Northwest the level was 9%, both as of the third quarter of 2004, making the revenue implications significant. But Antitrust left the door open, saying that if DoT adds conditions on any approval — possibly even excluding non-transatlantic international routes — it might be acceptable. 

Northwest and KLM have had antitrust protection for their alliance on international flights since 1993. Delta, Air France, Alitalia and CSA received antitrust immunity for their alliance in January 2002. After Air France bought KLM last year, Northwest and Delta sought to link their separate partnerships into a single protected alliance.

Air France/KLM, Alitalia and CSA joined Northwest and Delta in requesting a US immunity exemption. Continental, although a SkyTeam member, was not part of the antitrust request, in part because US authorities had separately placed limits on the co-operation between Continental and Northwest.


Source: Airline Business