AAI Encourages U.S. Department of Transportation to Take Deep Dive into Antitrust Immunity Request Involving Sky Team and Virgin Atlantic

Today, the American Antitrust Institute filed comments with the U.S. Department of Transportation (DOT) in an antitrust immunity proceeding involving airline joint venture agreements. The proceeding involves the application of Virgin Atlantic, Delta, Air France, KLM, and Alitalia for approval of antitrust immunity for alliance agreements.

If approved, the application would add Virgin Atlantic to the immunized joint venture agreement among existing members of the Sky Team airline alliance.  AAI’s comments highlight a number of important competition policy issues that should inform DOT’s decisions concerning requests for immunity generally, and in the instant case of the parties’ request for approval of and extension of immunity to their joint venture agreement.

In particular, AAI’s comments make four major points. First, expanded antitrust immunity in the instant proceeding does not equate to simply adding together two existing immunized joint ventures. The expansion would have nonlinear effects for competition and alleged public benefits.  Second, the DOT should take this opportunity to realign the asymmetric treatment of competitive effects and public benefits in immunity requests. Third, the DOT should consider the growing economic literature that undercuts efficiencies claims surrounding immunity. And fourth, the DOT should consider how expanded immunity will likely affect competition and consumers in both transatlantic and behind- and beyond-the-gateway U.S. markets.

The comments draw on AAI’s analysis in a March 2018 white paper, Revisiting Antitrust Immunity for International Airline Alliances. Among other things, the white paper emphasizes the importance of competitive issues surrounding grants of antitrust immunity, particularly in light of consolidation among the U.S. legacy network carriers that have come to dominate the three international airline alliances, Sky Team, Star, and oneworld.