Fears of consumer "harm" ignored
Continental Airlines has been given the go ahead to join the Star Alliance as an anti-trust immunity (ATI) member by the US Department of Transportation (DoT).
The Department also gave permission for the Houston-based airline to join three other Star members, Lufthansa, United Airlines and Air Canada in a transatlantic joint venture.
The decision largely swept aside fears of the US Justice Department (DoJ) that granting ATI to Continental was likely to result in harm to international routes from the US to Canada, China, Denmark, Portugal, Sweden and Switzerland.
It said fares were likely to rise on routes from New York to Copenhagen, Geneva, Lisbon, Stockholm and Zurich. Fares increase could range form 6.6% to 15% on some routes.
But Ray LaHood, the US transport secretary, said in granting the application: "I believe that the Department's decision will benefit consumers, enhance competition, and preserve jobs in the airline industry."
Under the ruling, the DoT said it would allow the four carriers to place a "portion" of their international air services within a new joint venture, to be called Atlantic Plus-Plus.
This will let them jointly to arrange "capacity, sales and marketing, as well as share revenues in international markets."
The DoT said the decision was "in the public interest because it would support increased levels of service in international markets served by the carriers, give consumers more travel options and shorter travel times, and reduce fares."
But the DoT acknowledged some of the DoJ's concerns by placing "limitations" on the ATI granted to the Star members in several markets.
These restraints, called "carve outs" affect four transatlantic markets, four US- Canada markets and all markets between America and Beijing.
Star carriers on these routes would not have ATI.
The DoT also said that the joint venture must be underway within 18 months with the carriers supplying annual reports on their progress.
The decision was welcomed by both Continental and United.
Larry Kellner, Continental's chairman and ceo, said he was "pleased" to receive final approval from the DoT.
He added: "The DOT decision greatly benefits our customers, employees and shareholders.
"It ensures global competition with other antitrust immunised alliances while encouraging the retention and growth of open skies between the U.S. and other nations."
Glenn Tilton, United's chairman, president and ceo, said: "The DoT decision greatly benefits our customers, employees and shareholders.
"It ensures global competition with other antitrust immunised alliances while encouraging the retention and growth of open skies between the US and other nations."
"United, Continental and the Star Alliance carriers will be able to compete more effectively in an increasingly global air travel market while providing our respective customers with improved access to more of the world and creating opportunities for our employees."
The DoT decision is also encouraging news American Airlines, BA and Iberia all members of the rival oneworld alliance which have also applied to the DoT for ATI.
A decision is expected later this year.
www.usdoj.gov www.dot.gov www.staralliance.com www.continental.com www.unitedairlines.co.uk