United Airlines, a unit of UAL Corporation (UAUA), announced last week that it would soon file an antitrust immunity application for a trans-Pacific joint venture with All Nippon Airways Co. and Continental Airlines Inc. (CAL). The joint venture would strengthen United Airline’s Pacific network and increase seats and cargo capacity.
The antitrust approval, which could take six months from the Department of Transportation (DoT), would enable the three airlines to engage in deeper and more effective cooperation producing greater benefits for the carriers and their customers. The joint venture allows airlines to share cost and revenue on certain flights regardless of which airline owns or flies the aircraft. It would also allow airlines to more greatly merge their operations to a point when they would almost be acting as a single airline.
Antitrust laws are meant to restrict businesses from coordinating prices and schedules. But the government can grant immunity from those laws in certain cases if it decides that consumers would benefit more from businesses working together.
The application for antitrust immunity closely follows the U.S open skies agreement with Japan earlier during the month, which would lift restrictions on the number of flights and routes across borders. It has already reached open skies agreements with more than 90 countries.
The DoT had granted antitrust immunity to both United Airlines and Continental Airlines in Jul 2009, enabling the two carriers to coordinate schedules and fares for services outside the U.S.
Peer American Airlines, a unit of AMR Corp. (AMR) and Delta Airlines, a unit of Delta Airways Inc. (DAL) are also competing for Japan Airlines to apply for antitrust immunity.
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Read the full analyst report on “DAL”
Read the full analyst report on “AMR”
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