DOJ Criticizes CAL UAL Immunity Request

[NavinRJohnson]

From Business Travel News:

DOJ Slams DOT's Tentative Star Alliance Antitrust Approval

JUNE 29, 2009 -- The U.S. Department of Justice in a filing on Friday vigorously criticized the Department of Transportation's tentative approval of Continental Airlines' request for antitrust immunity with nine Star Alliance carriers. DOJ's filing not only further delays final approval, but could derail the immunity effort.

In a filing that spans more than 50 pages, DOJ blasted the immunity request and asked DOT to amend its tentative approval, issued in early April. DOJ noted, "DOT should deny the broad requested immunity and instead grant a more limited immunity," noting the tentative approval as it stands would reduce competition, raise fares, seep into domestic markets and offer little in the way of consumer benefits.

Continental last year laid out its plan to leave SkyTeam to tightly align with nine Star carriers through the immunity request, which was fortified by a proposed joint venture with Air Canada, Lufthansa and United (BTNonline, June 30, 2008).

The United States Attorney General Eric Holder earlier this month recommended U.S. authorities not grant antitrust immunity to Star Alliance members until DOJ finished its review of transatlantic airline competition. DOT has yet to issue a final order on the antitrust immunity application after missing its May 31 statutory deadline for a final decision (BTNonline, June 24).

DOJ in the filing dated June 26 concluded, "The immunity requested by the joint applicants is unprecedented in scope and breadth, sanctioning collusion by United and Continental on all international service, eliminating or significantly reducing competition between certain Star alliance members on routes where they provide the only—or almost all of—the competitive alternatives, and removing previously imposed protections designed to preserve competition on overlap routes."

DOT in a separate filing said it would give interested parties until July 6 to comment on DOJ's analysis, after which DOT would proceed in issuing a final order.

Continental in a statement today said it remains "confident that DOT will approve our application." The carrier said it would file a response to DOJ's published comments with DOT. "We appreciate that DOJ has submitted its comments, which will allow DOT to close the docket and move forward with the application," Continental noted.

I'm interested to see what the final immunity will look like. This could force a merger to compete with Delta, since broad immunity might not be in the cards.

 

[Jetjockey]

I wonder if this has anything to do with UAL raising more cash? Getting ready for the marriage perhaps?

 

[Scrapdog]

I wonder if this has anything to do with UAL raising more cash? Getting ready for the marriage perhaps?

Yep - I just heard from the girl at the hotel desk that the merger is happening FOR SURE today at 6 PM Eastern....no wait, I had a guy on the jumpseat that says it really will happen next Friday. Oh wait, I forgot - Kellner called me yesterday and said the merger is certain next month after his Friday golf game. It all makes sense right? United's books are a real peach right now...they've got multiple airbus's (which of course CAL has none), and their 757's are not compatible. Makes perfect sense.

It's all a big conspiracy!!! The sky is falling, the sky is falling.

 

[NuGuy]

Heyas,

If UAL wanted a merger, they missed the boat. The NWA/DAL merger was a shoe in because of the administration. The current administration is sure to do a complete rectal exam.

If CAL doesn't want a merger, but the DOJ blocks their anti-trust immunity, things may get complicated.

Nu

 

[General Lee]

I guess the Gov't sees that you can't be "buddy buddy" and have all of those flights to China. You need to merge, and that's it. Have fun with that relative seniority merge.......


Bye Bye---General Lee

 

[glasspilot]

You need to merge, and that's it. Have fun with that relative seniority merge.......


Bye Bye---General Lee

I predict in the next decade or so there will be MANY MANY mergers. If I were President of ALPA I would do my best to get all carriers into ALPA and then create a national seniority. I would also keep it secret and never post it on a forum.

Seriously, you may want to think about it seriously now before it's too late.

 

[contrail67]

Heyas,

If UAL wanted a merger, they missed the boat. The NWA/DAL merger was a shoe in because of the administration. The current administration is sure to do a complete rectal exam.

If CAL doesn't want a merger, but the DOJ blocks their anti-trust immunity, things may get complicated.

Nu

So it might come down to merge or die?

 

[NavinRJohnson]

Delta in 1 to 2 years is going to be very powerful once they fully integrate. Not trying to stroke their egos, but with their global scope it will attract a lot of business customers for one stop ticket shopping.

However, right now all their proverbial sh!t isn't in one sock as they bring it all together, so there is some breathing room. The rest of the carriers will have to do something that can compete on that scale. Either hire like there's no tomorrow and buy aircraft (highly doubtful), or merge.

This antitrust ruling will shape the future of the US airline industry. If passed the status quo may continue on for a while longer. If not, industry shakeups will happen and soon. No doubt about it.

Navin

 

[whatitdoing?]

F***. I think this is another nail in my coffin and the eventual merger of CAL/UAL.

 

[luckytohaveajob]

Merger or die. It will be nice to see a bloody oozing sore covered by a 25 year band aid called CAL ALPA defend its weakling self with empty threats, non-action, selfish pilots and double talk while it rolls over on the CAL pilots.

25 years of selfishness with pilots who think they got away with but haven't. Once a bloody oozing sore always a bloody oozing sore, ie. CAL pilot.

There is no reforming a traitor who will take another pilots job.