The U.S. Department of Transportation (DOT) has granted antitrust immunity to American Airlines and four international partners in the oneworld Alliance to form an integrated transatlantic joint business.
Following the European Union’s final approval of the proposed joint business agreement (JBA) last week, this means the five carriers can now go ahead and put the arrangement into effect. Simon Talling-Smith, British Airways’ executive vice president Americas and the chairman of the new JBA’s Structural Management Committee, said on May 21 that if the partners received final approvals from the EU and DOT by the end of July, they would finalize preparations for the JBA in August and it would go into effect in October.
However, the DOT has also imposed several conditions that it says will protect consumers and preserve competition. Today’s action makes final the DOT’s tentative decision of February 13.
As a result of the DOT’s action, American and its oneworld alliance partners British Airways, Iberia Airlines, Finnair and Royal Jordanian Airlines will be able to more closely coordinate international services, particularly on transatlantic routes. Together, the five partners operate nearly 100 transatlantic flights daily.
The DOT found that granting antitrust immunity to the oneworld alliance would provide travelers and shippers with a variety of benefits, including lower fares in some markets, new nonstop routes, improved services and better schedules. The department also said that the alliance would enhance competition around the world by enabling the oneworld alliance to compete more vigorously with Star Alliance and SkyTeam, which operate similar immunized alliances.
But while the Department found that the alliance, on balance, was pro-competitive, it noted that the alliance could harm competition on select routes between the United States and London’s Heathrow Airport, a major hub for oneworld, where the availability of landing and takeoff slots is limited.
To remedy this potential problem, the DOT required the applicants to make four pairs of slots at Heathrow available to competitors for new U.S.-London service, with two pairs to be used for Boston-London service and the other two for service from any other U.S. cities.
The DOT also required changes to the alliance to ensure capacity growth, and required the carriers to submit traffic data and to implement the proposed joint business arrangement within 18 months. The carriers also must resubmit the alliance agreements for review within five years.