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  • Not-so-diplomatic immunity
    Posted by John M. Doyle 6:51 PM on Feb 05, 2009

    Rep. James Oberstar, chairman of the House Transportation Committee, is worried about the effect the increasing size of international carrier alliances is having on transatlantic competition. So the Minnesota Democrat has introduced legislation that would require a congressional study of U.S. Department of Transportation (DOT) policies.

    blog post photo
    Photo: Courtesy Rep. Oberstar’s office

    In introducing the bill (H.R. 831) Oberstar said he was concerned that the international market between the U.S. and Europe has come largely under the control of three major alliances: Star, which includes United/Lufthansa; SkyTeam, with Delta-Northwest/Air France-KLM and Continental and oneworld (American/British Airways/Iberia) which have been granted – or are seeking -- immunity from U.S. antitrust regulations by DOT.

    “If these immunized mega-alliances are allowed to proceed unchecked, the end result may be trading government control in the public interest for private monopoly control in the interests of the industry,” Oberstar says. Since DOT granted the SkyTeam alliance antitrust immunity to coordinate schedules and prices last year, Oberstar notes, Continental Airlines has filed an application to move from SkyTeam to the already-immunized Star alliance and the oneworld alliance is also seeking antitrust immunity.

    Continental said yesterday it would be pleased to participate in Oberstar’s proposed study, “but any further delay in review of current [antitrust immunity] applications would perpetuate the competitive imbalance that now exists.”

    Oberstar’s bill would require the Government Accountability Office to study whether “the benefits to consumers of alliances with antitrust immunity outweigh the adverse effects of the resulting loss of competition.” If enacted, it would also create a sunset provision ending all immunity grants three years after the bill was enacted.

    Tom Botts of Hudson Crossings, a travel industry strategic advisory firm, thinks Oberstar is making a big mistake and says lawmakers will get an earful from interested parties if the Transportation Committee holds public hearings on the issue.

    Tags: tw99, Star, SkyTeam, oneworld, alliance

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