The Obama Administration won praise from the Business Travel Coalition (BTC) for its decision - announced by the U.S. Department of Transportation (DOT) - to propose a grant of antitrust immunity to American Airlines, British Airways, Royal Jordanian Airlines, Finnair and Iberia Airlines to form a global alliance. The airlines are part of the oneworld alliance.
“Upon final approval, consumers and corporate travel departments will finally have three fully competitive alliance networks battling it out for their business," the BTC said. "With the Star [Alliance] and SkyTeam alliances having been operating with antitrust immunity for their ventures for some time, business travelers no doubt have been paying higher fares than necessary with oneworld’s inability to provide effective competitive discipline to the other two immunized alliances. While we are still reviewing the details, we are pleased DOT’s expert analysis was consistent with much of BTC’s formal comments in the proceeding. Corporate travel departments in the U.S. and Europe will now be able to aggressively leverage professional procurement processes to their benefit.”
“An immunized American Airlines/British Airways will strengthen the competitiveness of London Heathrow vis-à-vis, Paris Charles De Gaulle, Germany’s Frankfurt and Amsterdam’s Schiphol airports resulting in greater opportunities to play one alliance off against the others as these competitors seek to attract business travelers to transit their respective European gateway airports,” stated BTC Chairman Kevin Mitchell. “What’s more, as DOT specifically called out, inter-alliance competition worldwide will be strengthened for the benefit of corporate travel departments everywhere. On top of Japan Airlines’ decision this week to remain with oneworld, which guarantees three-way alliance competition in the U.S. to Japan and Northern Asia markets as well in the intra Asia markets, this decision announced today by DOT once again herald’s the dawn of an invigorated consumer voice at DOT.”
The BTC said it encourages the DOT and European Commission, which is also reviewing the airlines’ proposal, to proceed without delay in bringing these benefits to the airline customer. Visit www.businesstravelcoalition.com.
In its statement the DOT said the airlines must agree to conditions to protect consumers and preserve competition.
“In today’s show-cause order, the Department tentatively found that granting antitrust immunity to the oneworld alliance would provide travelers and shippers with a variety of benefits, including lower fares on more routes, increased services, better schedules and reduced travel and connection times," the DOT said. "The Department also said the proposed alliance would enhance competition around the world by creating competition with the existing Star Alliance and the SkyTeam alliance, which already have been granted immunity."
However, the DOT also noted that the alliance could harm competition on select routes between between the United States and London’s Heathrow Airport, oneworld’s primary hub, where the availability of landing and takeoff slots is limited.
As a condition of approval, the DOT is proposing in its show-cause order that the applicants make four pairs of slots available to competitors for new U.S.-Heathrow service. The Department also would require changes to the agreement to ensure capacity growth, and require the carriers to submit traffic data and implement the proposed alliance within 18 months of a final decision. A final decision could come within 90 days.