DOT Proposes to Approve Delta and Virgin Blue Alliance

An application for antitrust immunity made by Delta Air Lines and affiliates of the Virgin Blue Group to operate joint services between the U.S. and Australia may receive approval by the U.S. Department of Transportation (DOT). The carriers revised their application after the DOT tentatively denied an earlier request for immunity last September. The DOT is now proposing to approve the move.

Antitrust immunity allows airlines to closely coordinate their international operations. In its show-cause order, the DOT tentatively concluded that the revised application demonstrated that the alliance would produce sufficient public benefits to justify a grant of immunity without diminishing competition. The Virgin Blue Group includes V Australia, Virgin Blue and Pacific Blue Airlines affiliates in both Australia and New Zealand.

In its order, the DOT said that Delta and its partners had made substantial changes from their previous application, addressing concerns that immunity would provide only limited benefit to consumers. In the new application, the Virgin Blue Group expanded the scope of the alliance to include service to more passengers. It also said that it had completed an upgrade of its reservation system to ensure compatibility with Delta’s system, providing consumers with a more seamless travel network. In addition, the carriers said they would serve more cities and offer more capacity at the start of their alliance than they originally proposed, providing more benefits to consumers at the outset.

Interested parties are invited to provide comments as to why the proposed decision should not be made final, the DOT said. Objections are due in 14 calendar days, and answers to objections are due seven days afterward.

Following the comment period, the DOT will review all filings and then issue a final decision. If the DOT grants final approval, the carriers must start their joint venture within 18 months of a final order.


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