Continental Seeks a Joint Venture

In tentatively granting the antitrust immunity the US Department of Transportation (DOT) concluded the proposed joint venture would “be in the public interest because it would support increased levels of service in international markets served by the carriers.” Star Alliance members that would participate in the joint venture include Air Canada, Lufthansa Airlines and United Air Lines.

Other Star Alliance partners are Air Canada, Air China, Air New Zealand, ANA, Asiana Airlines, Austrian Airlines, British Midland Airways, Egyptair, LOT Polish Airlines, Scandinavian Airlines, Shanghai Airlines, Singapore Airlines, South African Airways, Spanair, Swiss International Air Lines, TAP Air Portugal, Thai, Turkish Airlines and U.S. Airways.

A condition for receiving the antitrust immunity is that the carriers implement the new joint venture within 18 months. The four airlines must also provide annual reports to the DOT regarding the implementation of alliance agreements. DOT particularly stresses that the carriers continue to operate under US antitrust laws as they refer to domestic service.

In commenting on the tentative approval, Continental’s chairman and CEO, Larry Kellner, says that his airline’s “entrance into Star Alliance will provide substantial benefits for consumers worldwide while preserving domestic competition and jobs. In addition, a timely final approval will allow Continental to provide a seamless transition for its customers from the SkyTeam Alliance to Star Alliance this fall.”

Continental has sought to leave its present partnership within SkyTeam, feeling it has greater opportunities with Star Alliance. This is particularly true since SkyTeam member, Delta merged with Northwest Airlines. Delta serves many of the same routes as Continental. In aligning service offerings with United in Star Alliance, Continental will be able to offer more international routes than its present offerings.

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