BTC Urges Industry Protest DOT DecisionApril 9, 2009 By: George Dooley
Warning of higher prices and reduced options, the Business Travel Coalition (BTC) is inviting North American, European and all other travel buyers and travel management companies (TMC) to join a BTC Signatory Letter protesting the Department of Transportation’s (DOT) April 7, 2009 approval of Continental Airlines’ application to join the Star Alliance as a fully-immunized member.
The DOT’s decision is subject to assessing public objections during a 21-day comment period now underway. “The antitrust immunity, as granted, places at substantial risk the ability of corporations to negotiate with airlines in an equitable manner and should be vigorously opposed by corporate travel buyers as well as travel management companies (TMCs) that service the corporate segment,” BTC Chairman Kevin Mitchell said.
“The antitrust immunity provisionally granted by DOT gives the Star Alliance (member airlines) legal impunity to act as a group and the latent right to threaten a corporation that unless it accepts, for example, a joint airline proposal for transatlantic purchases, then immunized members of the alliance will refuse to do business with it," the BTC said in its analysis. "A collective refusal to deal, especially between a group of suppliers and a customer, is usually considered an illegal group boycott, but the immunity granted Continental-Star would completely shield members from being sued by corporations, the U.S. Department of Justice or the European Commission.
“In a normalized trade environment, airline alliances and immunization would not be needed as airlines would be free to merge, pursuant to competition authority reviews. The good news is that alliance immunization, as a proxy for true mergers and acquisitions, has been effectively used as incentives by U.S., EU and other governments’ negotiators to encourage the liberalization of some 100 commercial aviation markets through Open Skies agreements. At issue is not the grant of antitrust immunity per se, but rather, the potentially pernicious consequences associated with its unnecessarily broad scope of application,” the BTC argues.
The BTC warned that some results could be higher prices and, in some cases, virtually no options should it not agree to the terms and conditions of the deal offered. “What corporation would want to be told by United, Continental, Air Canada and Lufthansa that they have no choice but to do a combined deal with all four for transatlantic service if it wants to have a discount on any of them? “ the BTC asked.
The full text of the BTC Signatory Letter can be found at http://tinyurl.com/djd53k.