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Order 2019-8-2 - Virgin Atlantic Airways, Delta Air Lines, Air France and KLM - Show Cause - Tentatively Approval and Tentatively Grant Global Antitrust Immunity
Virgin Atlantic Airways, Ltd., Delta Air Lines, Inc., Société Air France and Koninklijke Luchtvaart Maatschappij N.V.
Issued and Served August 2, 2019
By this Order, the US Department of Transportation tentatively approves, and tentatively grants global antitrust immunity to, alliance agreements submitted by Delta Air Lines, Inc., Société Air France, Koninklijke Luchtvaart Maatschappij N.V., and Virgin Atlantic Airways, Ltd.
The proposed alliance would remove the existing gaps preventing full coordination between Delta’s two parallel joint ventures with Virgin on the one hand, and Air France/KLM on the other. As part of this tentative decision, we are also tentatively revoking our previous grants of ATI amongst the Joint Applicants as well as CSA Czech Airlines and Alitalia Compagnia Aerea Italiana S.P.A. after six months. As the Amended JVA will replace the previously immunized agreements, our previous grants of ATI will be obsolete. Further, while both Czech and Alitalia were included in previous alliance agreements, neither is included in the agreements at issue here. As such, the underlying predicate for ATI covering these carriers no longer exists. We are also proposing a five-year review requirement, as well as our standard conditions.
We direct all interested persons to show cause why we should not issue an order making final our tentative findings and conclusions discussed herein. Objections or comments to our tentative findings and conclusions shall be due no later than 14 calendar days from the service date of this Order, and answers to objections shall be due no later than 7 business days thereafter. In the event that no objections are filed, all further procedural steps shall be deemed waived, and we may enter an order making final our tentative findings and conclusions.
JetBlue has argued that, in order to grant ATI to the Amended JVA, the Joint Applicants must demonstrate, and the Department must validate, significant public benefits that will be generated by the Amended JVA. This is the standard the Department typically applies in a de novo alliance/ATI application. As we have stated above, the case before us is not a de novo application, but rather the replacement of two separate, and approved, alliance agreements with a single integrated agreement. As such, we must examine whether the Amended JVA would preserve and enhance the public benefits on which the grants of ATI for its predecessor agreements were predicated.
Based upon our analysis, we expect that the proposed transaction will maintain the existing public benefits that have been generated from the current SkyTeam and Delta/Virgin joint ventures and will likely incrementally increase consumer benefits overall.
By: Joel Szabat