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DOT proposes to approve expanded transatlantic alliance involving Delta, Northwest

The U.S. Department of Transportation (DOT) proposed to allow Delta Air Lines, Northwest Airlines and four of their international partners in the SkyTeam alliance to combine their existing transatlantic alliances. In a show-cause order issued yesterday (9 April), the Department tentatively decided to grant antitrust immunity and allow the two U.S. carriers, along with Air France, Alitalia, Czech Airlines and KLM Royal Dutch Airlines, to coordinate their services and act as a single carrier for U.S.-Europe services. Northwest has an existing alliance with KLM, while Delta has an existing alliance with Air France, Alitalia and Czech Airlines.

The Department tentatively concluded that the proposed alliance is in the public interest because it features a proposed new and highly integrated joint venture that will likely produce efficiencies and provide consumers with additional price and service options, such as lower fares and more nonstop and connecting flights. The United States has an Open-Skies Plus aviation agreement with the European Union (EU). Each of the international carriers involved in today’s decision is from an EU member state. The U.S.-EU agreement assures that transatlantic markets remain open to other competitors because U.S. and European airlines are now able to serve any route between the United States and Europe.

As a condition of obtaining antitrust immunity, the Department proposed to require that the carriers implement the immunized alliance within 18 months. The Department stressed that the carriers would remain subject to antitrust laws for domestic service and for international flights that are not covered by the alliance agreement.

Beginning with the Northwest-KLM alliance, which was approved in 1993, the DOT has granted antitrust immunity to a number of international airline alliances where it found that the alliance benefited the public and did not substantially reduce competition.

Delta and Northwest first petitioned the Department to allow the alliance in 2004. After an initial tentative denial, they reapplied in June of last year with a substantially revised agreement.

Interested parties will have two weeks to comment on yesterday’s tentative decision. The parties will reply to all comments within seven days and the Department will then issue a final decision.

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Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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