Says Foreign Partnerships Affect International Competition

Just when anti-trust exemptions appear to be giving US domestic airlines a way to compete worldwide, a protectionist amendment threatens to turn it all back.

The Financial Times reports Minnesota Congressman James Oberstar (above), a Democrat and chairman of the House Committee on Transportation and Infrastructure, got a very cool reaction last month to his bill which would impose tougher standards on airlines seeking antitrust immunity.

So instead, Oberstar added it as an amendment to the FAA reauthorization and funding bill passed by his committee on Thursday.

US law prohibits domestic airlines from merging with or being more than 24 percent owned by foreign interests. It also prohibits competitors from working together, to avoid the effects of monopolies. So some US carriers have received waivers from antitrust laws to cooperate with other airlines without actually merging.

Delta has such an arrangement with Air France-KLM. United is partnered with Lufthansa, which also owns a small stake in JetBlue. There are similar alliances in the air cargo sector. In addition to helping US airlines compete on a global stage, the alliances have softened criticism from other nations of US protectionist laws.

But in arguing for his stand-alone bill last month, Representative Oberstar claimed the alliances are eroding airline competition on international routes. He wants all current alliances "sunsetted" after three years for review by the US Department of Transportation, a study by the Government Accountability Office to assess the effects on consumers of the antitrust waivers, and new DOT rules developed in response to the findings of the GAO.

Oberstar's February bill got little traction, but the attempt to attach it to FAA reauthorization is expected to draw a serious response from the airlines. Stay tuned.

FMI: http://oberstar.house.gov/, www.faa.gov