Star hits back at DoJ ATI claims

‘Myopic policy would jeopardise open skies deals'

The Star Alliance has hit back strongly at the US Department of Justice (DoJ) which claimed that the inclusion of new member Continental Airlines in its anti-trust immunity (ATI) cover was "likely to result in harm."

Star members and Continental accused the Department of having a "myopic policy" towards Continental receiving the same ATI as Lufthansa, Air Canada and United Airlines already have.

In a submission to the US Department of Transportation (DoT), they said such a view would mean jeopardising current and future open skies deals and "hobble the Star Alliance and Continental so they cannot compete effectively with SkyTeam alliance."

The 52-page document also said the DoJ's attitude would deny price and service benefits that ATI alliances brought to consumers as well as the operational and financial stability that these alliances also created.

It said the DoJ view amounted to an "abrupt reversal of international aviation policy" for which there was no justification.

The attack from the Star ATI members and Continental comes after the filing of the DoJ's views to the DoT last week.

Up until the DoJ intervention, the DoT had granted "tentative approval" to Continental receiving the same ATI cover as the three other carriers when it joins Star later this year.

The DoJ said extending ATI to Continental was likely to result in harm to international routes from the US to Canada, China, Denmark, Portugal, Sweden and Switzerland.

It said fares were likely to rise on routes from New York to Copenhagen, Geneva, Lisbon, Stockholm and Zurich. Fares increase could range form 6.6% to 15% on some routes.

The DoJ added: "The applicants present no evidence that customers will receive quantitatively or qualitatively different service if Continental receives antitrust immunity to coordinate with the Star ATI members compared to what would be provided if Continental merely interacted with the level of cooperation expected of any member of the broader, non-immunized Star Alliance."

But Star told the DoT that the DoJ had failed to recognise the "important" consumer and alliances benefits that it, the DoT had seen.  

 The DoJ had also failed to realise that open skies deals depended on ATI airline alliances and that competition could easily be created on routes where there was concerns.

The airlines also said the DoJ's fears on fares increases were "flawed", contradicted previous analyses and "should be disregarded."

The Star applicants said their views were supported by hundred of federal, state and local officials representing millions of consumers.

It warned the DoT that time was of the essence for a decision on the application which was submitted last year.

It called n the DoT to "embrace" the opportunities created by the application.

www.usdoj.gov   www.dot.gov   www.staralliance.com   www.continental.com   www.unitedairlines.co.uk