Continental Airlines will find out this week whether they will be allowed to join the Star Alliance at the end of May.
The London Financial Times is reporting that U.S. transport officials “plan to issue a show-cause order as early as this week on the carriers’ immunity application, clearing the way for final approval by the end of May, people familiar with the matter said.”
Last summer the airline rejected an offer by United Airlines to merge and they opted to leave SkyTeam, of which Delta, Northwest and Air France-KLM are members.
US rules forbid link-ups between U.S. airlines and its foreign counterparts. As such, airlines look to form alliances “to help share revenue and costs, and extend their reach around the globe.”
Even though Continental’s application to join Star Alliance’s immunized venture, alliances still come under close scrutiny by Washington.
Jim Oberstar, chairman of the House transportation and infrastructure committee, proposed a bill for tougher standards. Under the bill, “carriers could lose their immunity if they did not convince transport officials to approve their plans within three years.” Other critics claim that these alliances are only designed to mislead consumers.
Both Continental Airlines and the U.S. Department of Transportation declined to comment on the bill.
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I think that we should eliminate the anti-trust immunity as it is anti-consumer. It effectively reduces choice, competition and service, while allow the airlines to basically create an oligarchy consisting of 3 alliances.