Exactly!

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A340s don't fly... they're repelled from Earth by their ugliness!

According to testimony from the US Dept of Justice ...

When we conduct an antitrust investigation of a code-share, we always analyze the specific terms of each agreement on a case-by-case basis. In assessing the effect on competition, the first necessity is to define the relevant market, which may be one city-pair route, or a set of such routes, and then to measure that market in terms of its participants and concentration. ... From an antitrust viewpoint, the greatest threat to competition comes when two of very few airlines that compete in a market enter into a code-sharing agreement in that market. ...In the case of an international code share, an important factor we consider is whether a bilateral "open skies" treaty applies to the market. Open skies means that new entry by another carrier is possible, although we will still investigate how likely such entry would be in the event the code-share partners attempted to raise fares or reduce service.

http://www.usdoj.gov/atr/public/testimony/2294.htm

Isn't that what PresRDC said in concept?

While the HK bilateral is not an Open Skies agreement, it is close and gives "Hong Kong carriers new rights to operate between the United States and third countries."

http://www.state.gov/r/pa/prs/ps/2002/14524.htm



[This message has been edited by C17PSGR (edited 05-16-2003).]

He made 2 points.

1) AA and BA are not extending FF reciprocity trans-Atlantic due to anti-trust reasons.

2) Codesharing requires anti-trust immunity which can only be made if there is an Open Skies agreement in place.

As B777-232LR stated, point 2 is wrong.

Otherwise please explain the presence of the CO-VS trans-Atlantic codeshare (since the U.K. does not have an Open Skies agreement with the U.S.)

I am not 100% certain but I believe point 1 is incorrect too - I'll even proverbially stick my neck out and say it is. There is nothing preventing AA and BA from full FF reciprocity other than marketing reasons.

1. AA and BA sought antitrust immunity several years ago that would allow them to coordinate schedules and give full FF credit on US/UK flights. The results of their application was the condition that they divest slots at LHR that they did not want to. Since then, the EU has decided that the UK and US cannot enter into any bilateral agreements and all future agreements must be EU/US. AA apparently made the decision to leave the US/UK part alone and focus on the less controversial issue of code-sharing and FF credit beyond gateways. Perhaps that decision was partially based on a marketing decision but I suspect the decision was based on getting partial value out of the OW alliance even if they couldn't get everything they wanted.

2. He is right on point 2. According to the Dept of Transportation "an Open Skies agreement, which eliminates restrictions on air services between and beyond the participating countries, is a prerequisite to granting antitrust immunity. The goal of the United States remains replacing the current restrictive agreement with Open Skies."

http://www.dot.gov/affairs/dot02903.htm

Of course, there is always an exception. http://www.flyertalk.com/forum/wink.gif

Japan doesn't have an open skies accord with the U.S.

Given a huge volume of code-share traffic between the two countries, I really wonder it is an exception.

What BA and AA really wanted was to create 'Fortress Heathrow'. I think I read url=http://www.usdoj.gov/atr/public/comments/exhibit0.htm#P946_2709]some 60% of U.S.-U.K. capacity [/url]back in 1997 or so would have been controlled by these two airlines with little realistic prospect of other (U.S.) airlines being to get into Heathrow. The U.S. and E.U. monopolies commission weren't going to let this stand (and rightfully so in my opinion).

While you may need "open skies" for anti-trust immunity, the reverse isn't true. You don't need anti-trust immunity to have codesharing, just not be in a position to control the market.


[This message has been edited by terenz (edited 05-16-2003).]

Mainly because the two are pretty open to allowing 5th freedom flights (even to 3rd country airlines) and there aren't too many ways to control the market?

Correct me if I am wrong but you not only have the U.S. and Japanese carriers on this market but you also have SQ, TG, RG, KE and a few others. It's probably safe to say not airline or airline alliance has a monopoly on U.S.-Japan (or specifically NRT) routes.

The 5th freedom traffic right is given to only six carriers, of which two are cargo flyers. AA is not a fifth freedom carrier and extensively code shares with JL and CX, though its arrangements with JL have recently been curtailed.

If my understanding on this issue is correct, it is the U.S. government that wants open skies with Japan. Japan wants the cabotage right in the U.S. market but not interested in open skies.

[This message has been edited by Chiangi (edited 05-17-2003).]

1. The AA/BA mileage restrictions have nothing to do with anti-trust concerns. The carriers implemeneted the restrictions for competitive reasons - AA and BA don't want their premium pax using the TATL services of the other airline. AA and BA could allow TATL FF reciprocity tomorrow if they so desired.

2. Codeshares and ATI are two very different things. In a nutshell, a codeshare requires independent business decisions between the carriers, whereas partners with ATI are allowed to collude. With few exceptions, codeshares are not held to the same level of scrutiny as ATI requests.

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Thank you for choosing Continental Airlines, a proud member of the SkyTeam Alliance.

This is simply not true - read the DOT rulings before tossing this out to the public


[This message has been edited by B Watson (edited 05-17-2003).]

Someone once called the OneWorld alliance OneHeathrowWorld.
I guess that will come true if CX pulls this off. I say bring it on.

Sorry to disappoint you guys, but what I said was fundamentally correct. I may have made the case too strong, but the fundamental principle of what I said is correct. I was under the impression that the US/HK agreement was an open skies accord, but I may well be wrong on that. Even if I am, it is still a liberalized agreement and I guess DOJ thought it okay to grant anti-trust immunity to AA and CX.

Anti-trust immunity is neeeded for a codehsaring agreement and it is usually only granted when the airline's nation of origin has an Open Skies accord. You are right to point out the VS/CO codeshare, which is a departure from the stated policy of USDOT and USDOJ. I also believe UA and BMI codeshare on BMI's flights to the U.S. out of MAN. I have for the past few years been trying to figure-out the reason this exception was made, but have been unable to do so. My theory is that market share is the controling factor here.

The AA/BA deal has been held-up for lack of anti-trust immunity. Codesharing is part of this deal and is not possible absent anti-trust immunity. AA and BA would love to codeshare on the US-LHR route and have said so publically on many occasions. That they don't has nothing to do with marketing concerns.

When it comes to government policy, nothing is absolute. My mistake was making DOJ's policy sound too hard and fast.

Yes it is

Where are you getting this from?? It's dead wrong http://www.flyertalk.com/forum/frown.gif

ATI is not needed for codeshare arrangments... hence the following:
DL/AM
DL/SA
DL/JM
DL/CZ
DL/LY
DL/AT
UA/MX
UA/BD
UA/NH
UA/NZ
UA/AC
UA/US
NW/CO
NW/AS
CO/VS
AA/CX
AA/BR
AA/JL
etc etc

Also, CX and AA do not share antitrust immunity as the two have never thusfar filed for the exemption and are not permitted to collude routing, merge reservation systems/FFPs, merge revenue, etc.

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Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
~ConcordeBoy

Try the Unofficial Continental Airlines Dictionary

PresRDC is correct.

You do need open skies and codeshare authority (antitrust immunity).

AA/CX code-share:
http://dmses.dot.gov/docimages/pdf84/211039_web.pdf