Justice Department Opposes Continental Airlines' Request for Antitrust Immunity

Strategic Insights -

The Justice Department has come out against Continental Airlines' bid for antitrust immunity to work more closely with United Airlines and other carriers on international service. In a regulatory filing, the department argued that broader immunity could harm competition on other routes, including those between the U.S. and China, and potentially raise fares within the United States. Continental, however, remains confident that the Transportation Department will approve its request, citing the need for immunity to compete fairly with airlines that already have antitrust immunity.

Key Takeaways:

  • The Justice Department opposes Continental Airlines' request for broad antitrust immunity to work with United Airlines and other carriers on international service, citing concerns about harming competition on other routes.
  • The department argues that broader immunity could raise fares within the United States and harm competition on routes between the U.S. and China.
  • Continental Airlines claims that it needs antitrust immunity to compete fairly with airlines that already have immunity, such as those in the Star Alliance.
  • The Justice Department suggests that the benefits of antitrust immunity for Continental could be achieved without immunity, and that cooperation with Air Canada and European SkyTeam members could lead to higher fares and fewer choices for consumers.
  • The opposition to Continental's request comes as other airlines, such as American Airlines, are seeking immunity to work more closely with British Airways and Iberia on trans-Atlantic routes.

Statistics:

  • The Justice Department cited specific routes where cooperation between United and Continental could harm competition, including those between the U.S. and China, the U.S. and Canada, and within the United States.
  • Continental Airlines operates as the fourth-largest airline in the United States and is the leading carrier at Newark Liberty International Airport.
  • The Transportation Department has given preliminary approval to Continental's request, but the final decision rests with the department.

Sources:

  • The Associated Press, "Justice Department Worried About Airline Competition"
  • Continental Airlines spokesman Dave Messing
  • Justice Department regulatory filing
  • American Airlines spokesman Andrew Backover
  • Transportation Department statement on preliminary approval of Continental's request