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US Airways/United Codeshare/Marketing Agreements

Continental/Delta/Northwest Agreements

By:  Read C. Van de Water

Counsel: Crowell & Moring, Bruce Keiner, 202 624-2615 for Continental / Northwest Airlines, Megan Rae Rosia, 202 842-3193 / Shaw Pittman, Rober E. Cohn, 202 663-8060 for Delta

If the Department is prepared to approve these proposals, what proposals could be opposed in the future? If three carrier alliances and their partners are allowed to control 82% of the domestics markets, where would the line be drawn? If these alliances are approved or proposed, the Department would be sending a signal that it would not oppose any level of concentration and would allow a duopoly or even an oligopoly control of the nation's air transportation system.

It is interesting that the Department subjects proposed international alliances to more significant reviews than it has proposed to give the massive domestic alliance proposals now before it. While the Department continues to allow these alliance carriers to withhold certain information from the public, in international alliances, each interested party is provided with full details of the proposals.

By:  Air Carrier Association, Edward Faberman

The Notice describes the agreements under review as "code-sharing and frequent-flyer program reciprocity agreements." Because only redacted copies of the agreements have been filed, however, and because America West has had only the briefest access to even the redacted versions, the full content and import of the agreements cannot be ascertained within the seven days allowed by the Notice. It may be that the full agreements involve a much more extensive coordination of marketplace conduct by the Filing Carriers than simple "code-sharing and frequent-flyer reciprocity." Cooperation among competing carriers on other aspects of service - revenue, capacity, etc. - would warrant substantially more serious concerns regarding these agreements.

Counsel:  America West and Latham Watkins, Abbott Lipsky, 202-637-2200

For the reasons stated below, American requests that the Department extend the waiting period for the proposed codesharing agreements by 150 days, extend the waiting periods for the other agreements by 60 days, and require Continental, Delta, and Northwest to make unredacted copies of the agreements available for review by counsel and outside experts for interested parties who sign an agreement to keep the information confidential and use it only for purposes of preparing comments on the agreements.

Counsel:  American, Carl Nelson, 202-496-5647, carl.nelson@aa.com

Because of the likely importance of the decisions at hand, the analysis must not be rushed. The necessary time must be taken for the DOT, DOJ, and the interested public to inspect the details of the proposed alliances and to evaluate their implications.

By:  AAI, Albert Foer

I would like to express my concern with the two industry-encompassing code­share/partnership proposals that have been submitted to the Department for review under 49 U.S.C. 41720. These proposals -- one submitted by United Airlines and US Airways and one submitted by Delta Airlines, Northwest Airlines, and Continental Airlines -- represent control of approximately 60% of the domestic air transportation market share. While these proposals are not mergers, they will involve close coordination of business actions including code-sharing, frequent flyer participation, airport coordination, joint revenue and inventory management, and coordination of sales efforts. As such, they closely approximate the domestic alliances which we have reviewed with care in the past under state and federal antitrust laws.

As Chair of the thirty-five state Airline Working Group of the National Association of Attorneys General, I am therefore writing to urge you to extend the period for public comment upon these proposed agreements that are before the Department and to consider the two proposals together in order to analyze fully the individual and cumulative effect of the proposals on competition in the airline industry at this crucial juncture in our nation's history.

By:  Thomas Miller, Attorney General

The Agreements at issue here follow the submission, one month earlier, of similar proposed code-share and frequent flyer reciprocity agreements by United Airlines and US Airways. The Department should not only focus more intently on the Agreements of the Filing Carriers herein, but considered them in the context of the United Airlines-US Airways proposal. Five of the nation's six largest carriers are seeking permission to codeshare, coordinate schedules, frequent traveler programs and airport facilities, among other aspects of their operations. Such an unprecedented scale of coordination amongst so great a portion of the entire domestic aviation industry present an extraordinary circumstance which can not be given a reasonable and thorough review, in its entirety, by September 23, 2002.

Counsel:  jetBlue and Dow Lohnes, Jonathan Hill, 202-776-2000

Caution and introspection should be the obvious reaction of anyone concerned about the competitive health of the airline industry when confronted with the fact that five of the six major domestic carriers, all of which have extensive international networks, have agreed to enter into cooperative marketing agreements of vast scope and size. Certainly, the Department must recognize that the potential for anticompetitive behavior is much greater if these five network carriers to be able to form two extremely large marketing alliances, the sizes of which will dwarf the market shares of the remaining non-aligned carriers. This recognition should lead the Departments of Transportation and Justice to call for and obtain the detailed kind of empirical data they routinely seek when confronted with merger or airline alliance agreements that must either be permitted to be consummated or challenged as anti competitive, either by the DOT using its authority under 49 U.S.C. §41712, or by the Department of Justice applying the nation's anti-trust laws. This information should come not only from the proponents of the transactions but from other air carriers that may have both data and analysis that would aid the Departments in their assessments of the financially fragile state of the airline industry.

Counsel:  Silverberg Goldman, Robert Silverberg, 202-944-3300

Together, these three applicant carriers have near monopolistic control of nine major hub airports (CLE, EWR and IAH fc CO; ATL, CVG and SLC for DL; and DTW, MEM and MSP for NW). Air servloe at Nashville is directly influenced by th services these carriers provide at their hubs, especially at Memphis, Atlanta and Cincinnati. The markets betwee Nashville and these nine major hub airports are among the most important destination markets for Nashville passenger and several of those markets already have extremely high fares from Nashville. 

Consequently, MNAA urges the Department to immediately act to delay the effectiveness of the agreement! Furthermore we also urge the Department to conduct a formal review of the Delta/Northwest/Continental agreements t determine whether or not the agreements are unlawful under 49 U.S.C. 41712.

By:  Nashville Airport Authority

In the few days since the Delta/Continental/Northwest agreements have been publicly available, it has not been possible for Southwest to fully analyze them, but it is clear that the three-airline alliance, coupled with the previously-announced United/US Airways alliance, would produce a dramatic and permanent consolidation of the U.S. airline industry, far beyond any code-sharing or other marketing agreement heretofore permitted . by the government among domestic air carriers. The sheer size and scope of the transactions -- covering more than one-half of all U.S. air traffic -- dwarf any previous domestic codesharing agreements. Further, the airlines involved have extensive route overlaps with one other, and thus the potential for the elimination of competition and collusion among a majority of the nation's largest airlines is obvious. In fact, the agreements would permit the alliance airlines to engage in numerous, pervasive forms of cooperation that would patently diminish competition among them, allow them to act in concert against other (non-aligned) airlines, and inescapably lead to higher fares and fewer service options for consumers in many markets.

Accordingly, the Department should give these proposals deliberate and thorough consideration in a proceeding that allows full participation by the public and unrestricted access to relevant information. We urge the Department to consolidate both proposals in a single public docket, extend the waiting periods for both proposals to the maximum lengths permitted under section 41720, and commence an investigation to determine whether the alliances are unlawful under 49 U.S.C. 41712 as unfair or deceptive practices or unfair methods of competition.

Counsel:  Southwest, Robert Kneisley, 202-682-4534, bob.kneisley@wnco.com

The Delta-Northwest-Continental Alliance is clearly a precedent-setting proposal that requires careful analysis and review. The proposed marketing arrangement between US Airways and United Air Lines, which like the existing agreement between Northwest and Continental involves airlines with minimum overlap and complementary networks, will result in increased access, enhanced competition, and significant consumer benefits. However, the Delta­-Northwest-Continental arrangement has been born from a public desire by Delta to snuff out its primary competition on the East Coast, and it is seeking to do so by combining the networks of the nation's third, fourth, and fifth largest air carriers.

The alliance between Northwest and Continental achieved the type of consumer and competitive benefits that will result from the US Airways-United codeshare. The addition of Delta, however, to the Northwest-Continental arrangement creates a significant amount of network overlap and route redundancy and will result in market domination and increased concentration. Instead of enhanced competition and more consumer choice, a DL-NW-CO Alliance will lead to greater concentration, less competition, and fewer choices.

Counsel:  US Airways and O'Melveny Myers, Joel Burton, 202-383-5300

The Washington Airports Task Force believes that the pending Code-share and Frequent Flyer reciprocity agreements between Delta, Northwest and Continental raise the same competition issues involved with the similar, recently filed United/US Airways agreements. Consequently, if the Department decides to conduct a formal review of the United/US Airways agreements, the Task Force believes it should also conduct such a review of the Deita/Northwest Continental agreements. If the United/US Airways agreements are permitted to go into effect, the same result should apply to the Delta-Northwest/Continental agreements.

By:  Stephen Gelband

By: Marilyn Bayless

By: Sandy Turbeville, Bill Hammond

By: Nadine Kujawa

By: Jim Reinhartsen

By: Jeff Potter

By: Joan Verplanck

By:  Members of Congress

By: Dennis Eckart

Continental Airlines, Inc., Delta Air Lines, Inc. and Northwest Airlines, Inc.

On its face, this three-carrier alliance raises serious concerns about the future structure and competitiveness of the U.S. airline industry. Given the extensive route overlaps among the alliance carriers, the potential for elimination of competition among the three airlines is obvious. Coupled with industry consolidation that has already taken place, the alliance would effectively shrink the number of independent hub airline networks to three: the DL/NW/CO alliance, the UA/US alliance, and American Airlines, which previously acquired the assets of TWA. The implication is that the alliance partners will use their combined resources to strengthen their already-dominated hubs, discouraging competitive entry by non-aligned carriers including those filing this Joint Motion that offer low­fare and unique single class premium service. Were this to occur, the impact on the travelling public could be devastating.

By: Richard Magurno

ASTA will not waste the Department's time repeating the well stated and entirely correct argument set forth by the moving airlines. We do, however, have an addition for the proposed evidence request, as follows: 

"Provide unredacted copies of all agreements, studies, analyses, reports or other documents that relate to the interaction of the proposed code-share alliance with Orbitz and/or other travel agents." 

By: Paul Ruden,  703 739-6854

Continental Airlines, Inc., Delta Air Lines, Inc. and Northwest Airlines, Inc.

By: Jack Drake

By: Sara Bluhm

By:  DOT

Continental Airlines, Inc., Delta Air Lines, Inc. and Northwest Airlines, Inc.

By: Various Submitters

By: James Sharpe

By: Elizabeth Flores

By: Lee Brown

By: Jim Kollaer

By: Jon Lindsay

By: Jose Flores

By: John Whitmire

By: Jon Lindsay

By: Bill Hammond

By: Sandy Tuberville

By: Dennis Eckhart

By: Vernett Dillard

We ask that you to take the necessary steps to block this alliance until proponents present detailed information justifying the agreements, non-aligned airlines and other interested parties have been given a full opportunity to respond to that information, and the Department completes a thorough analysis of its impacts. We also ask that you meet with us in the next few weeks to discuss the health survival of our part of the airline industry. Unless the Department takes these necessary steps, the effectiveness of the type of low fare and service-based competition we represent will be at risk.

By: Richard Magumo, Linda Mitchell, David Sislowski and Robert Land

By: Philip Beachem

By: Arlen Spector and Rick Santorum

According to my constituents, the amount of time allowed by the DOT for public comment period on this agreement is too short to permit detailed review and analysis needed for complex agreements that have the potential to limit competition in domestic airline markets. Furthermore, they feel that the DOT needs to ensure that all interests be required to fully disclose all details of the agreement, how it will be implemented, and justify them by offering evidence of consumer benefits.

By: Russell Feingold

Delta Air Lines, Inc., Continental Airlines, Inc. and Northwest Airlines, Inc.

As you know, airlines have been relying upon cooperative marketing agreements to meet consumer demand for over a decade. The proposed agreement, which involves domestic and international flight codesbaring and frequent flier and airport lounge program reciprocity, would be welcome news for the travelers who utilize Northwest's hub in Memphis. Your office approved a similar proposal by United Airlines and US Airways as recently as October 2, 2002. We urge you to give the Northwest Airlines, Continental Airlines and Delta Airlines agreement the same fairness test you gave United Airlines and US Airways. Northwest, Continental, and Delta are eager to implement the proposed agreement, and we hope that the review currently underway at the Department of Transportation and the Department of Justice is completed in a timely manner.

By: Fred Thompson and Bill Frist

Delta Air Lines, Inc., Continental Airlines, Inc. and Northwest Airlines, Inc.

The Department is providing outside parties access on a restricted basis to unredacted copies of the agreements. Comments by interested persons reflecting their review of the unredacted copies may assist the Department in determining whether to extend the waiting period or take other action on the agreements.  After considering these comments and the nature of the agreements at issue, we have determined that, as contemplated by Rule 12, we should allow other parties to see unredacted copies of the agreements on a restricted basis and that doing so should facilitate our consideration of the issues presented by the agreements. For example, the incentives of Delta, Continental, and Northwest to compete with each other will depend in large part on the applicable financial terms when one airline sells seats under its code on a flight operated by one of the other two airlines. That kind of information has been redacted in the copies of the agreements submitted by Delta, Continental, and Northwest for public review, precluding outside parties from fully analyzing the likely competitive impact of the agreements.

We are not setting a deadline for submission of any supplemental comments based on the review of the unredacted agreements. However, any party that wishes to submit such comments should do so promptly, since the three airlines have asked us to decide expeditiously whether to allow them to implement the agreements. We will also be considering whether any additional extension of the waiting period for the code-share agreement would be appropriate.

By: Read Van de Water

Delta Air Lines, Inc., Continental Airlines, Inc. and Northwest Airlines, Inc.

We have determined to extend the waiting period for the code-share agreement for an additional thirty days to give us time to consider the supplemental comments being submitted by other parties interested in the agreement. While we cannot extend the waiting period for the frequent flyer reciprocity agreement again, we are continuing to examine the competitive issues raised by the frequent flyer reciprocity agreement, and we request that parties address those issues in their comments as well.

To assist us in our review, we have given interested parties the opportunity to submit comments on the agreements, initially on the basis of redacted copies of the agreements and more recently on the basis of unredacted copies, subject to restrictions designed to ensure that the confidential business information in the agreements does not become public. We made the unredacted copies of the agreements available to the parties on November 12 after giving Delta, Continental, and Northwest some advance notice of our decision to make the copies available. 67 FR 69297 (November 15, 2002).

We hope to make a final decision by December 21 on whether more formal action should be taken on the agreements.

By: Read Van de Water

Continental Airlines, Inc., Delta Air Lines, Inc. and Northwest Airlines, Inc.

By: David Danielson

By: Travis Lott

The Department should not rush its review of this far reaching proposal. The present time limits allow insufficient time for comment by affected persons and the kind of detailed review and analysis necessary to understand its impact on airline competition, consumers and communities. We believe that, if approved, this alliance could significantly change the dynamics of competition in the industry, and may put at risk the vitality of low fare and service-based competition. Industry concentration levels, which already appear to be at the highest levels since deregulation, could significantly increase.

TOM MILLER, Attorney General of Iowa /  ARABELLA W. TEAL, Corporate Counsel for the District of Columbia / RICHARD E. DORAN, Attorney General of Florida / G. STEVEN ROWE, Attorney General of Maine / MIKE HATCH, Attorney General of Minnesota / ELIOT SPITZER, Attorney General of New York / WILLLAM H. SORRELL, Attorney General of Vermont

By: Tom Miller

While it would be an overstatement to say that the two alliances taken together will reduce the number of major airlines from six to three, it does not seem too much to say they could alter the competitive strategies that will drive this important industry. The purpose of an alliance is to cooperate with one's competitor and henceforth five of the six major airlines would be in an arguably compromised competitive status with respect to some of their most significant rivals.

By: Jonathan Baker

By: Michael Fisher

By: Kevin Kane

By: John Ensign

By: Dave MacIver

By: Terence Furlong

By: James O'Neill

The Department has determined to extend the waiting period for the Delta/Northwest/Continental code-share agreements for an additional thirty days, from December 21, 2002, to January 20, 2003.

We have informally reviewed the agreements submitted by Delta, Continental, and Northwest, discussed the competitive issues with the Justice Department, and given outside parties the opportunity to review unredacted copies of the agreements and to submit comments based on that review and other information available to such commenters. 67 FR 69804. We have received comments on the proposed agreements from interested parties as recently as today. We have also received complaints that the three airlines have allegedly engaged in anti-competitive conduct in the recent past. We have met with Delta, Continental, and Northwest, and with other interested parties. In their written comments, a number of parties have requested that we extend the waiting period to allow additional time for consideration. See, the November 15, 2002, Letter from AirTran, America West, Frontier, JetBlue, Midwest Express, Southwest, and Spirit; the November 12, 2002, Letter from Tom Miller, the Attorney General of Iowa, written on behalf of himself and the Attorneys General of Connecticut, the District of Columbia, Florida, Maine, Minnesota, New York, and Vermont; the November 13, 2002, Letter from Senator John Ensign; the November 4, 2002, Letter from Senator James M. Inhofe; and the October 29, 2002, Letter from Senator Russell D. Feingold.

While we have not made any final decision, we have advised the three airlines that we believe the agreements as presented to us raise competitive issues. We have discussed our concerns in detail with the three airlines. Because we need additional time to complete our review of the agreements and to complete further discussions with interested parties, we are extending the waiting period to January 20, 2003.

By: Read Van de Water

Continental Airlines, Inc., Delta Air Lines, Inc., and Northwest Airlines, Inc.

Continental/Delta/Northwest Agreements

As required by 49 U.S.C. § 41720, Delta Air Lines, Northwest Airlines, and Continental Airlines submitted code-sharing and frequent-flyer program reciprocity agreements to the Department for review.  After analyzing the agreements and conducting an extensive informal investigation, the Department has determined that the agreements, if implemented as presented by the three airlines, could result in a significant adverse impact on airline competition, unless the airlines formally accept and abide by certain conditions that are intended to limit the likelihood of competitive harm.  If the airlines choose to implement the agreements without accepting those conditions, the Department will direct its Aviation Enforcement office to institute a formal enforcement proceeding regarding the matter.

If we are notified promptly that the three carriers agree to implement the alliance subject to the conditions set forth above, we would not now institute an enforcement case under our governing statute.  Given our strong concern that the agreements could have anti-competitive results, however, we would continue to monitor closely the implementation of the agreements.  We, of course, reserve the right, if we obtain evidence that leads us to believe that the joint venture is adversely affecting competition, to refer the matter for enforcement action.  Further, if the three airlines at any time decide that they will no longer comply with a formal agreement accepting our conditions, they will have created a new agreement that must be submitted to us under 49 U.S.C. 41720, subject to all of the provisions of the statute, including the prescribed waiting period.  Under our established interpretation of 49 U.S.C. 47120, the same will be true if they materially modify the terms of the agreements submitted by them on August 23.

By:  Read C. Van de Water

Delta Air Lines, Inc., Continental Airlines, Inc. and Northwest Airlines, Inc.

Delta Air Lines, Northwest Airlines, and Continental Airlines have resubmitted their codeshare and frequent-flyer program reciprocity agreements to the Department for review.  The three airlines originally submitted those agreements for review under 49 U.S.C. § 41720 on August 23, 2002.  The Department determined that the agreements, if implemented as presented by the three airlines, could result in significant adverse impacts on airline competition unless the airlines agreed to six conditions that would limit the likelihood of competitive harm.  The three airlines have accepted three of the six conditions and, after consultations with the Department, have proposed alternative language for the remaining three conditions.  The Department is inviting interested persons to submit comments on whether the airlines’ proposed alternative language adequately addresses the competitive concerns relating to those three conditions.
 
Any comments should be submitted by March 18, 2003.

By: Read C. Van de Water

This letter sets forth the commitments of Continental Airlines, Inc., Delta Air Lines, Inc. and Northwest Airlines, Inc. to adhere to certain terms and conditions set forth below under and during the effectiveness of the Marketing Agreement.  After discussing these conditions with the Department, the Alliance Carriers have concluded that the Department's conditions 1, 5, and 6, proposed pursuant to its authority under 49 U.S.C. §41712, are acceptable without change, but that they cannot agree to conditions 2, 3, and 4 as proposed. The Alliance Carriers wish to propose alternative language for those conditions to address the Department's concerns.

Counsel: Continental, Rebecca Cox/ Delta, Scott Yohe/ Northwest, Andrea Newman

ACI-NA takes no position in the comments on the merits or deficiencies of the alliance carriers' counter-proposal. However, ACI-NA and its members are greatly concerned about the way in which the DOT proposal as well as the counter-proposal would contribute to the gradual but persistent intrusion into airport rights and responsibilities. These rights, including the rights to manage, operate and finance their airports, were carefully preserved by Congress in the Airline Deregulation Act of 1978. Nevertheless, in recent years the Department of Transportation and the Federal Aviation Administration, are increasingly undermining the ability of airport operators to make crucial decisions regarding the management and financing of their airports. The result is that airport operators have been placed in the untenable position of having the responsibility to the traveling public for the safe, efficient and financially sound operation of their airports without having the power to implement rational decisions to satisfy their important public duties.

The latest example of this unfortunate trend is DOT's cavalier treatment of contractual obligations between airports and airlines contained in the "Termination of Review Under 49 U.S.C. 41720 of Delta/ Northwest/ Continental Agreements"

Counsel: Patricia Hahn, 202-293-8500

Massport supports the Alliance Airlines' proposed alternative to the DOT ­imposed condition to the extent that it requires the release to Massport, at its request, of two Northwest gates at Boston-Logan and does not preempt contractual conditions.  In the alternative, Massport recommends that the Alliance Airlines' proposal be modified to require the surrender of Terminal E, Gates 3A and 3B. Gates 3A and 3B are contiguous to existing Massport-controlled common-use gates and common-use support facilities, and can be easily added to that inventory and reallocated for the best and most efficient use of those facilities in an effort to accommodate the excess demand for such facilities during more normal industry operational levels.  Furthermore, Gates 3A and 3B are wide-body gates. Northwest operates only one daily wide-body flight at Boston-Logan and, therefore, squanders wide­body gate capacity, a scarce resource at Boston-Logan.

By: Thomas Kinton

Galileo has a more general concern that the overall effect of the alliance arrangement will be anticompetitive. As explained below, however, Galileo has a particular concern about the proposed joint marketing arrangements and accordingly focuses these comments on language for the condition relating to joint bids. In particular, carriers that have substantial shares of the traffic in hub markets have engaged in anticompetitive conduct with respect to their CRS affiliates in an effort to increase their dominant airline position in such markets and are likely to do so in the future. These carriers have the ability to exert significant pressure on corporations and travel agencies in these markets, and they have used such pressure to disadvantage both CRS and airline competitors. In this connection, it is significant that two of the alliance carriers are owners of the Worldspan CRS, and that all three are owners of Orbitz, an on-line service that is now making airline booking services available to travel agents and corporations.

Counsel: Covington Burling, Carolyn Corwin, 202-662-6000, ccorwin@cov.com

After its review, the Department rightfully concluded that the proposed alliance is not designed to stimulate new traffic, thus benefiting consumers, but rather designed to simply capture passengers now traveling on other airlines. Just as the alliance failed to meet even a prima facie case that it merited DOT's approval on grounds that it would be in the interest of the American consumer, so too Delta's Song is equally designed not with the consumer or competition in mind, but rather the thwarting of competition and long-term harm to the consumer as its goal. Delta's own leaders have stated that Song is intended to "attack" and aggressively target low fare competition, apparently regardless of cost or expected financial losses even at a time of unprecedented economic duress.

Counsel: Robert Land, 301-279-9727, robert.land@jetblue.com

The Memphis-Shelby County Airport Authority has reviewed the airlines proposed alternative language on three of the conditions contained in the Department's review of the proposed codeshare and frequent-flyer program reciprocity agreements and find them to be appropriate and acceptable.

By: Larry Cox  

The Montana Department of Transportation supports the alternative language as submitted by Delta, Northwest and Continental Airlines for the marketing agreement.

By: David Galt

If anything, the carriers' additional authorized operations should be geared toward the Department's stated goal of adding flights to smaller cities that have limited service. However, a careful review of the carriers' proposal indicates that the additional year 2 flights will almost exclusively be category II and unrestricted flights, with the vast majority being in the unrestricted category. The parties have proposed that no less than 12% of the year 2 increases be category I flights, but this is a meaningless restriction. A review of the alliance carriers' current schedules indicates that they do not even serve enough category I cities to meet the flight percentage thresholds. And, under their proposal (though buried in a footnote), the parties would be able to substitute category II for category I flights. Thus, DL-NW-CO have developed a proposal that pays lip service to the Department's concerns for small community benefits, yet results in exactly what the Department was trying to prevent-unfettered code share to large markets.

Counsel: O'Melveny Myers, Joel Burton, 202-383-5300

By: Michelle Buchecker

As a result of growing economic problems, as emphasized by the arguments made by Continental, the Department should immediately suspend consideration of the Continental, Delta, and Northwest Request for Alliance Approval. Considering the perilous economic times facing the entire industry, it would not be in the public interest to allow three of the nation's largest carriers to combine certain operations while they seek economic relief from other requirements. Certainly, the economic problems cited by Continental apply to all carrier operations and future economic survival.

Counsel:  ACAA, Edward Faberman, 202-639-7502, epfaberman@uhlaw.com 

On February 28, Delta Air Lines, Northwest Airlines, and Continental Airlines resubmitted their code-share and frequent-flyer program reciprocity agreements to the Department for review under 49 U.S.C. § 41720.  The implementation of these two agreements would constitute a key part of the three airlines’ proposed alliance.  In their resubmission, the airlines accepted three of the six conditions that the Department had stated were necessary to avoid a formal enforcement proceeding, and they proposed alternative language for the other three conditions.  The Department has determined that the alternative language proposed by the airlines adequately addresses the competitive concerns relating to those three conditions.  The Department is therefore terminating its current review of the agreements.  In reaching this conclusion, the Department is relying on the terms of the agreements, the airlines’ representations that they will compete independently on capacity and fares, and their formal acceptance of the six conditions as modified.

By: Read C. Van de Water

Department of Justice Press Release

US Airways/United Codeshare/Marketing Agreements

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