Order 2002-1-12 - US-UK Alliance Case

Order 2002-1-12 - US-UK Alliance Case - Order to Show Cause

U.S.- U.K. Alliance Case

Order 2002-1-12
OST-2001-11029

Issued January 25, 2002
Served January 25, 2002

Order to Show Cause

U.S.- U.K. Alliance

The Department of Transportation today tentatively approved antitrust immunity covering the alliances of air carriers American Airlines and British Airways, and United Airlines and bmi, a decision that will significantly benefit consumers by expanding service to a host of U.S. cities; encouraging additional price competition; and increasing passenger choice. Final approval of antitrust immunity, which depends on several conditions yet to be met, will greatly enhance competition in the nation's largest overseas market by allowing four new U.S. carriers to enter the London Heathrow market, and providing passengers with 17 new roundtrip services between the U.S. and Heathrow Airport for a total of more than 6,200 new flights per year.

The Department's analysis and tentative conclusions for approving anti- trust immunity are largely in line with the recommendations of the Department of Justice. Tentative approval of antitrust immunity is based on several conditions yet to be met, including the divestiture by American and British Airways of 224 take-off and landing slots for flights by new competitors between U.S. cities and Heathrow airport.

    The Department's order tentatively allocates those slots as follows:
    *  5 daily roundtrips to Continental (3 of which must be served from
       Newark)
    *  6 daily roundtrips to Delta (3 of which must be served from New York's
       JFK
    *  Airport, and 1 from Boston)
    *  3 daily roundtrips to Northwest
    *  2 daily roundtrips to US Airways
    *  bmi would be required to provide slots to United for a daily round trip
       from Boston.

Final approval also hinges on the finalization of an open skies agreement between the U.S. and U.K. The nation's existing aviation agreement with the U.K., one of its most restrictive, limits where U.S. carriers can fly, how many flights they can operate, and what prices they may charge, providing minimal consumer choice for the almost 18 million passengers traveling the route every year. The latest round of open skies talks are expected to begin in Washington on Monday, January 28.

By: Read Van De Water