Star members granted tentative anti-trust

By Megan Kuhn

Continental Airlines and Star carriers Air Canada, Lufthansa and United Airlines have been granted tentative anti-trust immunity as SkyTeam member Continental aims to switch to the Star alliance in the fourth quarter and form a joint venture with the three existing Star members.

US DOT also temporarily approved the transatlantic venture, in which the four carriers would jointly arrange capacity, sales and marketing.

The airlines would also share revenue under the venture, and DOT would require a launch within 18 months.

Tentative approval of the proposed Star joint venture comes after US Congressman James Oberstar has introduced legislation that would require a three-year expiration period of current anti-trust pacts after FAA Reauthorization is enacted.

The Congressman contends if pending anti-trust approvals-which also includes an application from Oneworld carriers American Airlines, British Airways, Iberia, Royal Jordanian and Finnair-were combined with airlines already granted immunity, competition in US-European markets would largely be reduced to three alliances. SkyTeam carriers Delta Air Lines, Northwest Airlines, Air France and KLM won an immunized agreement in 2008.

DOT in its tentative approval ignored a request by Delta to require Lufthansa relinquish its 19% stake in JFK-based JetBlue Airways as a condition of DOT granting Star amnesty. Delta, which has a major domestic and international operation at JFK, cited concerns about competitive impacts of Continental's Newark Liberty. Delta believes that through Newark, Lufthansa could exert influence over Continental to cut capacity in 38 nonstop markets where Continental and JetBlue compete directly.

The agency says tentatively that structural changes are unnecessary to Lufthansa's relationship with JetBlue, but stressed the carriers would remain subject to antitrust laws with respect to domestic service.

Regulators first granted immunity to Star partners in 1996, when DOT approved an alliance between United and Lufthansa.

Objections to the latest DOT proposal for Star can be filed for three weeks and Continental and other involved parties will then have seven business days to respond. Regulators will issue a final decision after it reviews comments.

Continental intends to exit SkyTeam on 24 October.

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