*EPF306 12/26/2001
Text: U.S. Prepared to Approve International Air Carrier Alliance
(Antitrust immunity for Delta, Air France, Alitalia, Czech Airlines) (580)

The U.S. Department of Transportation have given tentative approval for airlines from four countries to form an alliance that would provide an integrated network of airline services. The four airlines are Delta Airlines from the United States, Air France, Alitalia, and Czech Airlines.

If made final, the approval would provide immunity from certain U.S. antitrust laws, thereby permitting the airlines to plan and coordinate their international services. The airlines would continue to operate as independent companies.

The Department of Transportation has previously granted antitrust immunity to a number of international airline alliances, beginning with Northwest Airlines and KLM Royal Dutch Airlines in 1993.

Following is the text of the press release:

(begin text)

Press Release
U.S. Department of Transportation
December 21, 2001

Department of Transportation Tentatively Approves Antitrust Immunity For Delta- Air France-Alitalia-Czech Airlines Alliance

The U.S. Department of Transportation (DOT) today tentatively approved an agreement between Delta Air Lines and three foreign air carriers to establish an integrated network of airline services.

The decision, if made final, would grant Delta and its partners Air France, the Italian carrier Alitalia, and Czech Airlines immunity from U.S. antitrust laws to the extent necessary to enable them to plan and coordinate services over their respective international route systems. The airlines will continue to be independent companies and retain their separate corporate and national identities.

Interested parties will have 14 days to show why today's tentative decision should not be made final. Replies to comments are due seven days afterward. After a review of the comments, the department will issue a final decision.

In its show-cause order, the department tentatively concluded that the proposed alliance would benefit consumers by increasing international service options and enhancing competition between airlines, particularly for traffic to or from cities beyond and behind major gateways. The United States has reached Open- Skies aviation agreements, which eliminate regulatory restrictions on competition, with France, Italy and the Czech Republic. An Open-Skies agreement is a necessary prerequisite to a final grant of immunity because it ensures that markets remain open to other competitors, the department said.

The department's tentative decision would immunize all of the alliance's international services with the exception of certain fares in the Atlanta-Paris and Cincinnati-Paris markets. Immunity would not apply in these markets to pricing and other related elements in connection with unrestricted coach-class fares or any business or first-class fare for nonstop passengers purchasing tickets in the United States, because Delta's dominant position in Atlanta and Cincinnati could give the alliance power over prices and capacity affecting business flyers and other time-sensitive passengers, the order said.

The department directed the alliance's foreign airlines to file traffic data with DOT for their services that include a U.S. point. In addition, within five years the airlines must resubmit their agreement to DOT for review.

Beginning with the immunized alliance between Northwest Airlines and KLM Royal Dutch Airlines, which was approved in 1993, the DOT has granted antitrust immunity to a number of international airline alliances where it found that the alliance benefited the public and did not substantially reduce competition.

The department's October 2000 report International Aviation Developments: Transatlantic Deregulation -- The Alliance Network Effect (available at http://ostpxweb.dot.gov/aviation) discussed the competitive and pro-consumer benefits of Open-Skies agreements and broad-based alliance networks. Currently, nine immunized alliances are in effect.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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