Airline alliances at risk from antitrust move
By Justin Baer in New York
Published: March 5 2009 00:53 | Last updated: March 5 2009 00:53
Legislation that could eventually force US airlines to abandon joint ventures with their transatlantic peers may be gaining momentum in Washington, just as carriers such as United, American and British Airways seek federal approval to build closer ties.
Stymied by rules forbidding mergers between US carriers and their foreign counterparts, many of world’s largest airlines have forged alliances to help share revenue and costs, and extend their reach around the globe. As those alliances evolved, airlines sought immunity from US antitrust rules to co-ordinate their schedules and fares.
Delta Air Lines has such a venture with Air France-KLM, while United enjoys an immunised relationship with Lufthansa.
Jim Oberstar, chairman of the House transportation and infrastructure committee, proposed a bill last month that calls for tougher standards on airline alliances that were granted antitrust immunity.
Later on Thursday, the Minnesota Democrat plans to add the antitrust immunity language to a measure that will set funding for the Federal Aviation Administration for the next two years.
While few industry insiders gave the bill much chance of passing on its own, its presence on an important funding bill may trigger a unified lobbying effort from the airline industry.
Under Mr Oberstar’s bill, carriers could lose their immunity if they did not convince transport officials to approve their plans in three years.
The timing of Mr Oberstar’s efforts is less than ideal for those carriers whose immunity applications are now before regulators. Continental Airlines applied for antitrust immunity to join United and Lufthansa in their alliance, and should have a decision from US regulators by May.
The bill may also spur protest from European airlines and government officials already frustrated with the perceived reluctance by their US counterparts to open the nation’s commercial *aviation market to foreign owners.
A similar FAA reauthorisation bill passed the House in 2007, and while it never came before a vote in the Senate its proponents may feel the legislation stands a better chance now.
Copyright The Financial Times Limited 2009
By Justin Baer in New York
Published: March 5 2009 00:53 | Last updated: March 5 2009 00:53
Legislation that could eventually force US airlines to abandon joint ventures with their transatlantic peers may be gaining momentum in Washington, just as carriers such as United, American and British Airways seek federal approval to build closer ties.
Stymied by rules forbidding mergers between US carriers and their foreign counterparts, many of world’s largest airlines have forged alliances to help share revenue and costs, and extend their reach around the globe. As those alliances evolved, airlines sought immunity from US antitrust rules to co-ordinate their schedules and fares.
Delta Air Lines has such a venture with Air France-KLM, while United enjoys an immunised relationship with Lufthansa.
Jim Oberstar, chairman of the House transportation and infrastructure committee, proposed a bill last month that calls for tougher standards on airline alliances that were granted antitrust immunity.
Later on Thursday, the Minnesota Democrat plans to add the antitrust immunity language to a measure that will set funding for the Federal Aviation Administration for the next two years.
While few industry insiders gave the bill much chance of passing on its own, its presence on an important funding bill may trigger a unified lobbying effort from the airline industry.
Under Mr Oberstar’s bill, carriers could lose their immunity if they did not convince transport officials to approve their plans in three years.
The timing of Mr Oberstar’s efforts is less than ideal for those carriers whose immunity applications are now before regulators. Continental Airlines applied for antitrust immunity to join United and Lufthansa in their alliance, and should have a decision from US regulators by May.
The bill may also spur protest from European airlines and government officials already frustrated with the perceived reluctance by their US counterparts to open the nation’s commercial *aviation market to foreign owners.
A similar FAA reauthorisation bill passed the House in 2007, and while it never came before a vote in the Senate its proponents may feel the legislation stands a better chance now.
Copyright The Financial Times Limited 2009
