DOT Approves AA/BA, Sets Slot Divestiture

The U.S. Transportation Dept. today issued its initial approval of the Oneworld joint venture and codeshare application, and regulators are only demanding four Heathrow slot pairs be given up.

First reaction from industry observers is that the preconditions set by DOT are relatively light, especially compared to the 16 slot pairs demanded by regulators last time British Airways and American applied for antitrust immunity. It is unlikely that the latest conditions will dissuade the two major Oneworld partners from going ahead with the joint venture.

The initial approval is in the form of a “show cause” order, and interested parties have 45 days to file comments – with another 15 days for counter-arguments. Opponents of the proposal are likely to argue that the slot divestment is not high enough.

DOT said that in general, the Oneworld ATI application will provide benefits to consumers including lower fares on more routes, better schedules and reduced travel and coonection times. The link-up will also enhance competition by providing balance against SkyTeam and Star alliances, which already have ATI, according to DOT.

However, DOT also noted that competition on select routes could be harmed, hence the slot givebacks at Heathrow. Regulators also require “changes to the agreement to ensure capacity growth, and require the carriers to submit traffic data and implement the proposed alliance within 18 months of a final decision.”

Tags: tw99, Oneworld, DOT, American, British Airways