DOT 26-03
Monday, March 31, 2003
Contact: Bill Mosley
Tel.: (202) 366-5571
DOT Ends Review Of
Alliance Carriers’ Agreement
The U.S.
Department of Transportation (DOT) today announced that it would terminate its
review of agreements among alliance carriers Delta Air Lines, Northwest Airlines
and Continental Airlines, allowing the carriers to go forward with their
code-share and frequent-flyer program reciprocity agreements subject to certain
conditions specified by the department.
On
Aug. 23, 2002, the three carriers submitted their code-sharing and
frequent-flyer reciprocity agreements to DOT for review as required by law.
On Jan. 17, the department announced that it would not seek to block the
carriers from implementing the agreement if they accepted six conditions that
would address the department’s competitive concerns. On Jan. 22, the carriers notified DOT that they intended to
move forward with the alliance without complying with all of the department’s
conditions. That same day, DOT
reaffirmed its intent to begin an enforcement proceeding to determine whether
the alliance agreements were unlawful. Later, the department and the carriers opened informal
consultations regarding the conditions and DOT’s concerns.
The carriers did not implement the agreements while those discussions
were ongoing.
On
Feb. 28, the carriers resubmitted their agreement to the department.
They acknowledged the department’s authority, accepted three of the
department’s conditions as written, and asked that DOT accept alternative
language for the other three conditions. The
conditions for which the carriers submitted alternative language would require
them to give up specified gates at Boston Logan and New York LaGuardia airports;
limit the total number of Delta-Continental and Delta-Northwest code-share
flights to 2,600 during first year and 5,200 in the second year; and restrict
joint bids to corporations and travel agents, including a prohibition against
making joint bids for domestic travel originating at a corporation or travel
agency’s headquarters city if the company has its principal place of business
in a city where the alliance carriers’ market share exceeds 50 percent.
The
three original conditions accepted by the carriers prohibit agreements among
themselves on fares, routes and capacity; seek to temporarily limit to two the
number of codes that can be placed on an individual flight in computer
reservations system displays; and prohibit restrictions on an alliance
carrier’s entering into a marketing relationship with other airlines after the
agreement has been terminated.
Following
its review of the resubmitted agreement and public comment received, the
department concluded that the alternative language adequately addresses its
competitive concerns relating to the three conditions.
The department added that it is allowing the carriers to move forward
based on their agreement to compete independently on capacity and fares and to
abide by the agreed-upon conditions. DOT
said it would continue to monitor the carriers’ implementation of their
agreement to ensure that it does not reduce competition.
The
department’s notice is available on the Internet at www.dot.gov/affairs/briefing.htm.
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