Agency Rejects NWA Alliance

Northwest Airlines may not win the antitrust immunity it insists it needs to maximize benefits from its membership in the SkyTeam international airline alliance.


Northwest Airlines may not win the antitrust immunity it insists it needs to maximize benefits from its membership in the SkyTeam international airline alliance.

If it can't cooperate with all other SkyTeam members on international fares and related financial matters, Northwest has said, its Atlantic service would be jeopardized — and might even end.

But the U.S. Department of Transportation on Thursday tentatively rejected the application of Northwest, Delta Air Lines and four other SkyTeam members for immunity for their alliance.

The DOT said the airlines failed to show why their six-way alliance should be given antitrust protection or why that would be in the public interest. In addition, the DOT said Northwest could achieve many alliance benefits without immunity.

The agency will make a final decision after it reviews reactions to its initial ruling. Northwest will appeal the decision, said Andrea Fischer Newman, the Eagan-based airline's senior vice president of government affairs.

Northwest needs a partner — or partners — in Europe to maintain a high level of service there, she said.

"United and American (airlines) have multiple European partners and have been granted multiple immunities with European carriers," Newman said. "This is the first time the DOT has denied (such) a grant of immunity. There appears to be a change of policy, as it impacts Northwest."

As far as the effect on Northwest's operations, she said, "it's too soon to speculate on how this will play out."

Since 1993, Northwest has had an antitrust exemption for its relationship with KLM Royal Dutch Airlines, allowing the two carriers to operate internationally as a joint venture.

Their partnership is worth about $1 billion in annual revenue to Northwest.

With Air France's acquisition of KLM last year, Northwest contends it needs antitrust immunity for its relationship with Air France, a lead member of SkyTeam. Otherwise, Northwest says it may not continue to get the traffic kick it has received in the past from its relationship with KLM.

And Northwest argues it needs antitrust immunity with the other SkyTeam members — Italy's Alitalia, CSA Czech Airlines and Delta — if it's going to grow its trans-Atlantic business.

An expanded SkyTeam operating with antitrust immunity will improve flight schedules, reduce travel times, add new service and lower fares, Newman said.

"Today's DOT decision places these benefits in jeopardy, and does not help Northwest's efforts to emerge from bankruptcy,'' she said. Both Northwest and Delta filed for bankruptcy Sept. 14.

The DOT said that the airlines' application was sketchy on likely benefits.

The agency also said the airlines already engage in a substantial integration of their services and are likely to integrate them further without immunity, "even though they may not coordinate their services and fares as much as they would with antitrust immunity."

The DOT noted that the U.S. Justice Department has warned that immunizing an alliance between Delta and Northwest might reduce their competition on domestic routes.

But Northwest and Delta have said they would set up firewalls to assure domestic price competition.

Martin J. Moylan can be reached at mmoylan@pioneerpress.com or 651-228-5479.


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