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Airlines

Northwest Airlines, KLM, and Alitalia Seek Antitrust Immunity for Joint Venture

Strategic Insights

— 1 min read

Northwest Airlines, KLM Royal Dutch Airlines, and Italy's Alitalia have announced plans to apply for antitrust immunity to operate as a single carrier across the Atlantic, expanding their existing partnership. The move, anticipated since November, would allow the three airlines to coordinate flight schedules, share revenue, and distribute costs as if they were one airline. If approved, the joint venture could add $1 billion in annual revenue to the current $2 billion stream.

Key Takeaways:

  • The three airlines plan to file an application with the U.S. Department of Transportation for antitrust immunity, which would enable them to operate as a single carrier across the Atlantic.
  • The joint venture would allow them to coordinate flight schedules, share revenue, and distribute costs as if they were one airline.
  • Northwest Airlines' spokesman Jon Austin estimates that the addition of Alitalia could add $1 billion in annual revenue to the joint venture.
  • The Transportation Department would study competitive issues in considering the application.
  • The International Association of Machinists (IAM) has expressed opposition to the deal, citing a 1993 labor conflict between Alitalia and IAM ground workers.
  • Northwest Airlines is willing to help both sides reach a resolution, while also considering the union's request to expand informational picketing to Northwest's hubs in Detroit and Minneapolis.

Statistics:

  • The joint venture currently generates a revenue stream of $2 billion a year.
  • Northwest Airlines operates more than 400 airplanes, while Alitalia operates 144 airplanes.
  • The three airlines serve 57 countries and 130 airports.
  • Alitalia's U.S. destinations include New York, Chicago, Boston, Los Angeles, and Miami.
  • The Italian flag carrier's hubs in Rome and Milan may be connected with Northwest's hubs in Detroit and Minneapolis, potentially leading to new air service between the two cities.

Sources:

  • Northwest Airlines statement, as quoted by Jon Austin
  • Transportation Department statement, as quoted by Bill Mosley
  • Alitalia's 1993 lockout of IAM ground workers at John F. Kennedy International Airport, as reported by Tony Sorrenti
  • Northwest Airlines' 1992 approval to coordinate flights with Amsterdam-based KLM, as stated by Jon Austin
  • United States and Italy's open skies aviation agreement, as mentioned by Bill Mosley

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