Also Gives Tentative OK To "Atlantic Plus-Plus" Joint Venture

The US Department of Transportation (DOT) proposed Tuesday to grant antitrust immunity to Continental Airlines for its participation in the Star Alliance, and to approve a new joint venture among four of the alliance's members. Antitrust immunity allows airlines to coordinate their services and act as a single carrier for international air services covered by the immunity.

In a show-cause order issued Tuesday, the Department tentatively decided to grant immunity to new alliance member Continental... and, to allow Air Canada, Deutsche Lufthansa Airlines, United Air Lines, and Continental Airlines to place a portion of their international air services within a new joint venture, to be called Atlantic Plus-Plus.

Under the venture, the carriers would jointly arrange capacity, sales and marketing as well as share revenues.

"The Department tentatively concluded granting antitrust immunity to Continental to join the alliance and approving the joint venture would be in the public interest because it would support increased levels of service in international markets served by the carriers, give consumers more travel options and shorter travel times, and reduce fares," said the agency.

"The United States has open-skies aviation agreements with all of the home countries of the carriers involved in today's decision. Open-skies agreements provide for international market access to all home-country airlines."

As a condition of obtaining antitrust immunity, the DOT proposed to require the carriers implement the new joint venture within 18 months. The carriers also must provide annual reports to the Department about the implementation of their alliance agreements. DOT stressed that the carriers would remain subject to antitrust laws with respect to domestic service.

The Department first granted immunity to Star Alliance partners in 1996, when it approved an alliance between United and Lufthansa. Other members of the alliance are Air Canada, Austrian Airlines, British Midland Airways, LOT Polish Airlines, Scandinavian Airlines System, Swiss International Air Lines, and TAP Air Portugal.

Interested parties will have three weeks to file objections to the tentative decision. The parties then will have seven business days to respond to objections.

FMI: www.continental.com, www.staralliance.com, www.lufthansa.com, www.united.com, Read The Tentative Decision at www.regulations.gov, docket number DOT-OST-2008-0234