Order 2001-1-19 - Star Alliance Antitrust - Granting Approval of Antitrust Immunity for Alliance Agreement

Order 2001-1-19 - Star Alliance Antitrust - Granting Approval of Antitrust Immunity for Alliance Agreement

United Air Lines, Inc., Austrian Airlines, Osterreichische Luftverkehrs AG, Lauda Air Luftfahrt AG, Deutsche Lufthansa, A.G., and Scandinavian Airlines System

Order 2001-1-19
OST-2000-7828

Issued January 26, 2001
Served January 26, 2001

Order Granting Approval and Antitrust Immunity for Alliance Agreement

Approval and Antitrust Immunity for an Alliance Expansion Agreement and an Amended Coordination Agreement

We find that the Alliance Agreements should not substantially reduce competition in the U.S.-Europe market. During the 12 months ended March 2000, the data show that the U.S. -Europe nonstop passenger market share for the United-Lufthansa-SAS immunized alliance was 17.8 percent. The proposed alliance nonstop passenger market share (including Austrian, 0.7 percent; and Lauda 0.2 percent) was 18.7 percent. In contrast, the American- Swissair- Sabena immunized alliance had a 13.4 percent nonstop passenger market share; and the Northwest-KLM-Alitalia immunized alliance had an 11. 5 percent nonstop passenger market share. British Airways had a 13.6 percent nonstop passenger market share.

We have determined that the U.S.-Europe market is highly competitive. Eight U.S. airlines provide scheduled passenger service in this market from their hubs, either individually or in conjunction with an existing alliance. Among these U.S. airlines, Delta Air Lines (8.9 percent), Continental Airlines (6.1 percent), US Airways (2.6 percent), and Trans World Airlines (1.4 percent) had a combined nonstop passenger market share of 19 percent. The U.S.-Europe market is also served by more than thirty other foreign airlines, principally from hubs in their homelands.

Another competitive issue concerns ownership interests that the Joint Applicants have in competing CRSs. Except SAS, the Joint Applicants have ownership and marketing ties with Amadeus and Galileo, competing CRS firms. Therefore, as with the Delta Air Lines-Austrian Sabena-Swissair arrangement (See Order 96-5-26 at 31-32) and the American Airlines-Sabena-Swissair arrangement (See Order 2000-4-22 at 18), the proposed integration of marketing operations of the Joint Applicants presents a risk that CRS competition may be reduced. In view of these factors, we find that any grant of antitrust immunity for the Alliance Agreements should exclude the Joint Applicants' CRS interests and operations. We note that the Joint Applicants recognize that immunity will not extend to the Joint Applicants' management of any interest they may have in individual CRSs.

By: Susan McDermott

Order 2001-1-19
OST-2000-7828

Issued February 2, 2001
Served February 2, 2001

Erratum

Approval and Antitrust Immunity for an Alliance Expansion Agreement and an Amended Coordination Agreement

*In Order 2001-l-l 9, on page 16, ordering paragraph 3 is amended to read: 3 . We direct United Air Lines, Inc., Austrian Airlines, Osterreichische Luttverkehrs AG, Lauda Air Luftfahrt AG, Deutsche Lufthansa, AG, and Scandinavian Airlines System, and their subsidiaries, to submit any subsequent subsidiary agreement(s) implementing the Alliance Agreements for prior approval;

By: Susan McDermott