Continental Airlines (NYSE: CAL) just got the relief it needs to compete. Despite resistance from the Department of Justice (which can only recommend), the Department of Transportation has granted the airline immunity from antitrust laws. This clears the way for Continental to work with United Airlines (NASDAQ: UAUA) -- and other carriers -- on international routes. Now, the airline can join Star Alliance, which already has antitrust immunity.
At the same time, DOT approved a joint venture among Continental, United, Lufthansa (OTC: DLAKY) and Air Canada. This new relationship would involve trans-Atlantic routes.
The victory wasn't unconditional, however. The DOT wouldn't extend the antitrust immunity to a handful of international routes where Continental and its new Star Alliance partners are in decent shape. Included are four across the Atlantic, for between the United States and Canada and all flights between the United States and Beijing. Under this arrangement, Continental won't be able to work together on pricing and scheduling for these restricted markets.
This part of the ruling recognizes the DOJ's concerns about the risk of decreased competition and increased prices.
The DOT decision should make it easier for Continental to compete, and the flexibility is desperately needed (not just for Continental but for nearly any airline in this market). Currently, Continental is the fourth largest airline in the United States, and United is the third. The antitrust immunity is similar to that enjoyed by Delta Airlines (NYSE: DAL) and Air France. American Airlines (NYSE: AMR) is hopeful that the decision will make its application for antitrust immunity successful, as well. American seeks to partner with Spain's Iberia on service across the Atlantic.
Why isn't Bank of America updating its shareholders on CEO situation?
Before the bell: Futures sharply lower on Dubai's debt problems
Will Rich Ross really have a positive impact on Disney's movie operations?
Reader Comments (Page 1 of 1)
7-13-2009 @ 5:40PM
A. Marshall said...
Wow....look at the savings, we can do away with our court system and the Supreme Court. So, we are letting appointed people (not even elected) have priority over our court system.............unbelievable!