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ASTA and the Interactive Travel Services Association (ITSA) filed objections to the tentative decision of the U.S. Department of Transportation (DOT) to grant sweeping antitrust immunity (ATI) to the members of the Star Alliance (United, Air Canada, Lufthansa) and Continental Airlines and released a new economic analysis of ATI’s effect on air travel distribution by noted economist Prof. David Sibley.
"To protect the traveling public," the travel agencies 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 skepticism rampant and a new team in place at the DOJ’s 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 Prof. David Sibley, Professor of Economics at the University of Texas at Austin, and a former Deputy Assistant Attorney General for Economic Analysis, with economic analyses concluding that the DOT proposed grant of ATI will "harm competition and consumers," resulting in a "balkanization of air-travel information" with "less price transparency to air travelers." 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. Sibley observed that "the proposed ATI for Star Alliance will create or enhance the ability of the alliance to exercise monopsony power," with "the quantity of air travel to fall, resulting in higher air fares."
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
