DOT Approves oneworld Alliance's Antitrust Immunity Application
07/21/2010
The U.S. Department of Transportation said it granted antitrust immunity to American Airlines and four international partners in “oneworld” to form an integrated global alliance, but also imposed several conditions that it said will protect consumers and preserve competition. The action makes final the DOT’s tentative decision on Feb. 13. As a result of the DOT’s action, American, British Airways, Iberia Airlines, Finnair and Royal Jordanian Airlines will be able to more closely coordinate international services.
The DOT found that granting antitrust immunity to the oneworld alliance will provide travelers and shippers with a variety of benefits, including lower fares in some markets, new nonstop routes, improved services and better schedules. It also said the alliance will enhance competition around the world by enabling the oneworld alliance to compete more vigorously with Star Alliance and SkyTeam, which operate similar immunized alliances.
While the DOT found that oneworld, on balance, was pro-competitive, it noted that the alliance could harm competition on select routes between the United States and London’s Heathrow Airport, a major hub for oneworld carriers, where the availability of landing and takeoff slots is limited. To remedy this potential problem, the DOT required the applicants to make four pairs of slots at Heathrow available to competitors for new U.S.-London service, with two pairs to be used for Boston-London service and the other two for service from any other U.S. cities The DOT also required changes to the alliance to ensure capacity growth, and required the carriers to submit traffic data and to implement the proposed alliance within 18 months. The carriers also must resubmit the alliance agreements for review within five years.
“This final approval is fantastic news for all three airlines and the oneworld alliance,” said Willie Walsh, British Airways chief executive. “We’ve waited 14 years to bring the benefits of the transatlantic joint business to our customers and level the playing field with the other two global alliances. As we have argued all along, the EU-U.S. market is highly competitive and Heathrow’s liberalization in 2008 opened it up even further. We are delighted that the U.S. and EU authorities have recognized this. We’re pleased that the DOT and EU have worked together to ensure that there is consistency in the number of slots that the three airlines have to give up for our competitors to use on services from Heathrow to the U.S.”
Added American CEO Gerard Arpey: “This is a great day for the customers, employees and shareholders of American Airlines and our joint business partners in the oneworld alliance. We thank all of the regulators who reviewed our proposals, both here in the United States and in Europe, and all those persons and organizations that supported us in this effort. We look forward to delivering enhanced competition for customers on transatlantic flights. By working collaboratively, we will enhance our product offerings, strengthen our route networks and better position our airlines to compete in an ever-changing global aviation marketplace.”
The oneworld airlines said they plan to launch the transatlantic joint business this autumn and will co-operate commercially on flights between the EU, Switzerland and Norway and the U.S., Canada and Mexico. Customers will be able to travel more easily on all three airlines’ combined route network that will serve 433 destinations in 105 countries with 5,178 daily departures. By working together, the airlines said they will expand customer choice by supporting routes that would not be economically viable for a single airline. Customers also will benefit from greater access to discounted fares, expanded opportunities to earn and redeem frequent flyer miles and elite tier benefits on flights and continued reciprocal airport lounge access. The decision, the show-cause order, and other documents in the case are available on the Internet at www.regulations.gov, docket DOT-OST-2008-0252. For more information, visit www.oneworld.com or www.dot.gov.
