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U.S. Department of Transportation

DOT approves Star Alliance plan to add Continental, establish joint venture

The U.S. Department of Transportation (DOT) granted final approval for antitrust immunity to Continental Airlines for its participation in the Star Alliance, and approved a new joint venture among four of the alliance’s members.  Antitrust immunity allows airlines to coordinate their services and act as a single carrier for international air services covered by the immunity.

“I believe that the Department’s decision will benefit consumers, enhance competition, and preserve jobs in the airline industry,” said U.S. Transportation Secretary Ray LaHood.

In the final order issued today, the Department granted immunity to new alliance member Continental and allowed Air Canada, Deutsche Lufthansa Airlines, United Air Lines, and Continental Airlines to place a portion of their international air services within a new joint venture, to be called Atlantic Plus-Plus.   Under the venture, the carriers will jointly arrange capacity, sales and marketing, as well as share revenues in international markets.

The Department concluded that granting antitrust immunity to Continental to join the alliance and approving the joint venture was in the public interest because it would support increased levels of service in international markets served by the carriers, give consumers more travel options and shorter travel times, and reduce fares.  The United States has open-skies aviation agreements with all of the home countries of the carriers involved in today’s decision.  Open-skies agreements provide for international market access to all home-country airlines.

Following comments from the Department of Justice and other parties on DOT’s April 7 tentative decision, the Department placed new limitations on the immunity in several markets to preserve competition.  These limitations, also called “carve outs,” affect four transatlantic markets, four markets between the United States and Canada, and all markets between the United States and Beijing, China.  The Star carriers may continue to serve these routes, but they will not be covered by the grant of immunity at this time.

As a condition of obtaining antitrust immunity, the Department required the carriers to implement the new joint venture within 18 months. The carriers also must provide annual reports to the Department about the implementation of their alliance agreements.  The Department stressed that the carriers would remain subject to antitrust laws with respect to domestic service.

The Department first granted immunity to Star Alliance partners in 1996, when it approved an alliance between United and Lufthansa.  Other members of the alliance are Air Canada, Austrian Airlines, British Midland Airways, LOT Polish Airlines, Scandinavian Airlines System, Swiss International Air Lines, and TAP Air Portugal.