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DoT set to deny antitrust immunity for Delta/Virgin Blue alliance

9-Sep-2010 8:20 AM

US Department of Transportation (DoT) proposed (08-Sep-2010) it will deny an application for antitrust immunity made by Delta Air Lines and affiliates of the Virgin Blue Group with respect to joint services between the US and Australia. The Department tentatively concluded that Delta and Virgin Blue had not demonstrated that the alliance would produce sufficient public benefits to justify a grant of antitrust immunity. In reaching its tentative decision, the DoT noted Delta and its partners have only recently entered the US-Australia market, have not shown developed plans to operate as commercial partners, and have limited their cooperation to a handful of routes, thereby limiting the public benefits their alliance might produce. The Department also said Delta and Virgin Blue had failed to show that their alliance would have positive effects for consumers, such as lower fares or increased capacity. Interested parties have been invited to show cause why the proposed decision should not be made final. Objections are due in 14 calendar days, and answers to objections seven days afterward. Following the comment period, the Department will review all filings and then issue a final decision. [more - Press Release and Show Cause Order

Virgin Blue announced (09-Sep-2010) both airlines will be working with DoT over the next 14 day period to respond to the concerns raised. Virgin Blue strongly believes the proposed alliance with Delta will be good for consumers. Delta also stated it believes the agreement will benefit consumers (Associated Press, 08-Sep-2010). The airlines received approval from the Australian Competition and Consumer Commission (ACCC) for the agreement in Dec-2009 (Atlanta Business Chronicle, 08-Sep-2010). [more - Virgin Blue]

Delta Air Lines: “We strongly believe our proposed alliance with the Virgin Blue Group will be good for consumers. We are reviewing the DoT's tentative order and will respond within the comment period,” Company Statement. Source: Associated Press, 08-Sep-2010.