The DoT has announced that it has completed its review of a code-sharing agreement among Delta Air Lines, Northwest Airlines and Continental Airlines and will allow the agreement to take effect subject to acceptance by the carriers of certain conditions designed to preserve airline competition. 

The decision, which follows a thorough analysis of information received from the carriers and public comments, would allow the carriers to place their designator codes on each other’s flights in most markets.  The department allowed a similar agreement between United Airlines and US Airways to take effect on October 2, 2002. 

DoT bosses noted that they had carefully reviewed a complex set of issues raised by the proposed agreement, and had struck a middle ground favorable to consumers that allows the alliance carriers to enjoy increased efficiencies. In addition, the agreement encourages better service to smaller communities while maintaining competitive opportunities for low-fare carriers and others. For example, under the DoT provisions the alliance carriers would have to make surplus airport gates available to other carriers, and 60 percent of any new code-sharing flights resulting from the alliance would have to be operated to unserved, underserved or smaller communities. 

The carriers submitted proposed agreements for code-sharing and reciprocal frequent-flyer programs to DoT on August 23, 2002 under a statutory requirement that such agreements between major U.S. airlines be filed with the department at least 30 days before they take effect.  The department may extend the review period for a code-sharing agreement to a total of 150 days beyond the initial 30-day period. 

The DoT had extended the review period for the code-sharing agreement beyond the original waiting period to allow time to complete its analysis.  The department’s statutory responsibilities in this matter are separate from those of the DoJ (Justice), which has the responsibility to enforce the antitrust laws.

Somebody at the DoT said the restrictions that would be imposed on the carriers (summarized briefly below) are intended to address competitive concerns raised by the joint venture.          

The carriers may not coordinate or agree among themselves on matters such as fares, route entry or exit, or capacity. At their hub airports and at Boston, the carriers must at the airport authority’s request return gates that are used less than six turns per day.

Delta may place its code on no more than 650 each of Continental’s and Northwest’s flights, while Continental and Northwest each may place their codes on no more than 650 Delta flights.
Restrictions will be placed on the carriers’ ability to offer joint bids to corporate customers and travel agencies.

The carriers must request that their services be listed under no more than two codes in computer reservations systems (CRS) until the department completes its pending revision of the CRS rules.

The carriers may not enforce any provisions in their agreements that would restrict a partner’s ability to enter into a marketing relationship with any other airline after the agreements have been terminated.

FMI: www.dot.gov/affairs/briefing.htm