Two Alliances To Operate Under "Open Skies" Agreement       

The U.S. DOT Wednesday proposed to grant antitrust immunity to two air carrier alliances for services between the United States and Japan, subject to the Open-Skies aviation agreement between the two countries being signed.

The Department’s tentative decision would grant immunity to “oneworld” alliance members American Airlines and Japan Airlines, and separately to “Star Alliance” members United Airlines, Continental Airlines and All Nippon Airways. If the decision is made final, the members of each alliance would be able to more closely coordinate international operations in transpacific markets.

In the show-cause order, the Department tentatively found that granting antitrust immunity to each alliance would provide passengers and cargo with a variety of benefits, including lower fares on more routes, increased services, better schedules, and reduced travel and connection times.  Each proposed alliance would enhance competition, particularly in transpacific markets.

On December 11, 2009, the United States and Japan initialed an agreement that would establish an Open-Skies aviation relationship between the two countries once it is signed.  Under the new agreement, airlines from both countries would be allowed to select routes and destinations based on consumer demand for both passenger and cargo services, without limitations on the number of U.S. or Japanese carriers that can fly between the two countries or the number of flights they can operate. 

Parties have 21 calendar days to comment and seven business days to file answers.  After this period ends, the Department will review all filings and then issue a final decision.

In a news release, American said obtaining antitrust immunity for their proposed trans-Pacific joint business will allow American Airlines and Japan Airlines to better compete with the two other global alliances that serve the United States – Asia market.

"An immunized joint business will benefit the U.S. and Japanese economies, promote increased cultural exchange and provide more travel choices and greater access to discounted fares for millions of consumers," said Will Ris, American's Senior Vice President – Government Affairs. "Once DOT and the Ministry of Land, Infrastructure, Transport and Tourism of Japan issue final approvals for the joint venture, then officials from the U.S. and Japanese governments will sign the Open Skies agreement.

"American is appreciative of the support its application received from Senate Assistant Majority Leader Dick Durbin of Illinois and Ranking Member of the Senate Commerce, Science and Transportation Committee Kay Bailey Hutchison of Texas," said Ris. "We also thank the Chairman of the Senate Commerce Committee, Jay Rockefeller of West Virginia, for his consistent support of alliances.

In a separate news release, United and Continental say that, on final approval of antitrust immunity and the signing of an Open Skies aviation agreement between the United States and Japan, the airlines intend to establish with ANA a first-of-its-kind trans-Pacific joint venture, jointly managing activities including scheduling, pricing and sales and offering customers a greater selection of routings and a wider range of fare and service options.

“We are pleased with DOT’s action today, and look forward to offering our customers the full range of benefits under our alliance with ANA,” said Jeff Smisek, president and chief executive officer of United Airlines. “We thank the DOT for their thoughtful review, and look forward to final approval.”

FMI: www.dot.gov