“This preliminary decision beggars belief. The DOT last time said that in order to address the competitive harms, hundreds of slot pairs had to be handed over permanently [and] absolutely nothing has changed since then,” said Branson. “Four slot pairs is a complete joke and those responsible for this decision should hang their heads in shame.
Branson added: “The U.S. Department of Justice, who are the experts in competition issues, called for strict remedies to protect the public interest, because the alliance will blatantly harm competition and the consumer. The Department of Transportation has chosen to stick two fingers up at them. Millions of trans-Atlantic travelers will be adversely affected if the alliance receives final approval.”
The Virgin Atlantic president continued: “In my personal opinion, this draft decision is a real kick in the teeth for consumers and they will be paying the price for it for years to come. I urge the European Commission continue its more consumer focused approach when it takes its decision in the coming weeks.”
Branson’ airline claims American and British Airways control 100 per cent of traffic on the Heathrow-Dallas/Fort Worth route (as the only two airlines operating it); 80 per cent of traffic on the Heathrow-Boston Logan route; 62 per cent of passengers on Heathrow-New York JFK, the biggest UK-U.S. route; 70 per cent of traffic between Heathrow and Miami, which is one of American’s hubs; 68 per cent of traffic between Heathrow and Chicago O’Hare, which is American’s second-largest hub; and 48 per cent of traffic on the Heathrow-Los Angeles route.
However, the joint venture the DOT and EU have already approved among Star Alliance carriers Continental, United, US Airways, Air Canada and Lufthansa controls a far higher proportion of traffic on routes between Frankfurt ― Europe’s second-largest international gateway ― and North America. Similarly, the JV already approved among SkyTeam airlines Delta, Air France-KLM and Alitalia controls almost all of the traffic between the U.S. and Paris Charles de Gaulle and Amsterdam Schiphol, Europe’s two next-largest gateways.
Virgin Atlantic says it needs to study the DOT’s comments on the oneworld ruling in detail and consider its formal response to the DOT’s show-cause order.
On February 12, the day before the DOT gave its tentative blessing to the proposed American-British Airways joint venture, American and Japan Airlines (JAL) filed a similar application for anti-trust immunity for a joint venture between North America and Asia under the terms of the ‘Open Skies’ agreement recently concluded between the United States and Japan. The two airlines also must notify Japan’s Ministry of Land, Infrastructure and Tourism of their proposed transaction.
“This is a very significant step by oneworld member airlines to deepen co-operation with Japan Airlines since it reaffirmed its membership of the alliance earlier this week,” says John McCulloch, oneworld’s managing partner.
“We are committed to supporting JAL in its restructuring, and expanded co-operation like this is a key element of that programme. The filing for anti-trust immunity in such a timely manner is proof of that commitment, and it is heartening for all of us in the alliance to see things move ahead so speedily on this front,” says McCulloch.
“It is also great news for consumers. An immunized joint business agreement between these partners will strongly benefit the public by strengthening competition and expanding choice in one of the world’s fastest growing air travel markets,” McCulloch concludes.
After months of attempts by Delta Air Lines to try to persuade troubled Japan Airlines to leave the oneworld alliance and join Delta in the SkyTeam alliance instead ― and to apply for anti-trust immunity for a transpacific joint venture with Delta ― JAL decided on February 8 to remain a partner of American Airlines.
Japan Airlines has remained a member of the oneworld alliance despite Delta Air Lines' determined efforts throughout 2009 to persuade JAL to become a member of the rival SkyTeam alliance instead. The photograph shows a Japan Airlines Boeing 7777-300ER painted in a special theme livery to show the airline's membership of oneworld
Both American and Delta had fought for months to try to keep JAL in their camps, their efforts going as far as conducting what effectively became a public bidding war to offer financial inducements well in excess of $1 billion to buy JAL’s loyalty.
However, when the Japanese government (JAL’s majority shareholder) instead allowed JAL to enter bankruptcy and to decline financial aid from either U.S. airline, Kazuo Inamori, JAL’s new chairman new chairman and CEO, decided JAL woudl keep American as its U.S. alliance partner and would remain in the oneworld alliance.
Inamori apparently was persuaded by American’s argument that it would be much easier for American and JAL to receive anti-trust approval from the U.S. DOT for a transpacific joint venture than it would be for a proposed JAL-Delta combination.
As a result of its merger last year with Northwest Airlines, Delta is by far the most dominant U.S. airline on U.S.-Japan routes and has a major presence at Tokyo Narita Airport, Japan’s premier international gateway. American had argued that a Delta-JAL combination would create an effective monopoly on U.S.-Japan routes and would hold more than 60 per cent of all the slots at Narita.
Explicit in American’s argument was that American would lobby intensively to prevent a Delta-JAL combination from winning DOT approval.
Related to this story:
- DOT Approval Allows American and Qantas to Launch Transpacific Joint Business
- DOT Tentatively Approves Revised Delta-US Airways Slot-Swap Proposal
- DOT Gives Final Approval for American-JAL Joint Transatlantic Business
- American, BA and Partners Win Final DOT Approval for Joint Business
- Approval for JV with American, Iberia Would Boost Competition: BA’s Walsh
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