DOJ wants conditions on immunity for American, BA

AP News
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Posted: Dec 22, 2009 11:54 AM

The Justice Department says giving American Airlines, British Airways and other partners antitrust immunity to work closer together on coordinating flights could cause fares to rise up to 15 percent on some trans-Atlantic routes.

The agency wants the Department of Transportation to impose conditions on a grant of immunity to protect competition.

One suggestion it made in papers filed this week is to require the partner airlines to divest some takeoff and landing slots.

Justice said the proposed agreements would result in competitive harm on certain trans-Atlantic routes serving 2.5 million passengers annually. Fares between six pairs of cities _ Boston and London, Chicago and London, Dallas and London, Miami and London, Miami and Madrid, and New York and London _ could be affected.

"The applicants claim substantial benefits will flow from an expanded alliance, but they have not shown that immunity is necessary to achieve these benefits," Justice said in papers filed to the DOT on Monday.

American, a unit of Fort Worth, Texas-based AMR Corp., said in a statement Tuesday that it disagrees with the Justice Department's conclusions and believes the DOT will ultimately approve its immunity application with BA, Iberia, Finnair and Royal Jordanian Airlines.

"American looks forward to rebutting the points made by DOJ," the airline said.

Delta Air Lines Inc., the world's biggest carrier, already has antitrust immunity as part of its trans-Atlantic joint venture with Air France-KLM. Delta, based in Atlanta, is trying to lure Japan Airlines away from its alliance with American and into Delta's SkyTeam alliance, a move that if successful would lead Delta to seek antitrust immunity with JAL.

All Nippon Airways has an international partnership with United Airlines, a unit of Chicago-based UAL Corp., through the Star Alliance.

A joint venture allows airlines to share costs and revenue on certain flights regardless of which airline owns or flies the aircraft. It differs from a simple codesharing agreement in which one airline bears all the cost but another airline might get a share of the revenue for booking a customer on a flight.