DOT Gives Initial Approval For Star ATI, Joint Venture
By Adrian Schofield 
The U.S. Transportation Dept. yesterday granted tentative antitrust immunity approval for Continental to join the Star Alliance, and also to form an expanded transatlantic joint venture involving three other Star airlines.
In its show cause order, the DOT rejected recommendations from competing carriers to impose new carve-outs on the joint venture and alliance. In addition, DOT decided to eventually remove limited existing carve-outs on transatlantic routes, although it will retain restrictions on some U.S.-Canada routes.
The timing of the order — during a congressional recess — was significant. This could lessen the amount of criticism from some lawmakers who have raised concerns about granting antitrust immunity for airline joint ventures. But DOT is also under a deadline to issue a final decision by May 31, six months after the application was deemed complete. Other parties now have three weeks to file objections, and there will be another seven days for responses. After that, the DOT will make its final decision.
Continental proposes to leave the SkyTeam alliance and join Star in October. Lufthansa and United already have a revenue-sharing agreement, but the four-carrier joint venture would expand on that. DOT’s decision would allow Continental, Air Canada, Lufthansa and United to jointly arrange capacity, sales and marketing, as well as share revenue on covered international routes.
DOT said the alliance move and the joint venture will “create substantial new service options and fare benefits for customers,” and is “consistent with the public interest, will produce public benefits, and will not substantially reduce competition.”
This language is in sharp contrast to recent comments by House Transportation and Infrastructure Chair James Oberstar (D-Minn.), who believes immunized joint ventures are harming transatlantic competition. Oberstar has crafted legislative language that would review ATI criteria, sunset immunized alliances after three years, and require airlines to apply again.
In its Star alliance decision, DOT said the expanded joint venture must be implemented within 18 months from approval. It also found that no additional carve-outs were necessary to protect competition. Delta had asked for broad limitations on any expanded Star framework.
DOT granted the request of the Star carriers to remove existing carve-outs from the Chicago/Washington, D.C.-Frankfurt routes, once the joint venture is fully implemented. However, restrictions will remain in place for routes from Chicago and San Francisco to Toronto.
Photo: Continental
