ASTA, ITSA Fight Star Alliance Antitrust Immunity

ASTA and the Interactive Travel Services Association (ITSA) issued a report stating that the Department of Transportation's (DOT) proposed grant of antitrust immunity (ATI) to the Star Alliance and Continental airlines will harm competition and consumers, resulting in a balkanization of air-travel information with less price transparency to air travelers. The two groups filed objections to the tentative decision of the DOT to grant sweeping antitrust immunity to the members of the Star Alliance (United, Air Canada, Lufthansa) and Continental Airlines. The Star Alliance carriers believe the economic benefits of ATI outweigh the liabilities. The DOT has welcomed comments on the proposed move prior to a final rulemaking.

To protect the traveling public, the travel agent groups urged the DOT "to impose a limited carve-out to prevent collusion and the exercise of market power by the Star carriers in the distribution of air travel services."

Taking note of the recent controversy involving airline alliance antitrust immunity, the groups observed that "With congressional and EC (European Community) skepticism rampant and a new team in place at the DOJ's (Department of Justice) Antitrust Division now does not seem like an auspicious time to be granting wholesale exemptions from the nation's antitrust laws, at least without taking concrete steps to preserve the continuing vibrancy of travel agencies, which have led the way in consumer-driven transparency, independence, and innovation."

Accompanying the groups' objections was a new report by David Sibley, professor of economics at the University of Texas at Austin, and a former deputy assistant attorney general for economic analysis. Sibley noted that the joint applicants' ability to achieve their claimed efficiencies "will not be adversely affected by a 'carve out' with travel agencies and other providers of air travel distribution services" to preserve competition. He also observed "the proposed ATI for Star Alliance will create or enhance the ability of the alliance to exercise monopoly power," with "the quantity of air travel to fall, resulting in higher air fares."